Data Collection Survey on Thar Coal Field In Pakistan FINAL REPORT

Transcription

1 Islamic Republic of Pakistan Data Collection Survey on Thar Coal Field In Pakistan FINAL REPORT FEBRUARY 2013 JAPAN INTERNATIONAL COOPERATION AGENCY (JICA) Nippon Koei Co., Ltd. Coal Resources & Mining Engineering Co., Ltd. 4R JR

2 FINAL REPORT for The Data Collection Survey on Thar Coal Field in Pakistan CONTENTS Executive Summary Location Map Chapter 1 Introduction 1.1 Background of the Survey Present Situation of Power Supply and Demand Political Measures on Energy Sector and Development Plan Latest Government Decision Objective of Survey Objective of the Survey Survey Area Scope of the Survey Survey Schedule Chapter 2 Basic Data and Information 2.1 Coalfield Developments in Pakistan Coal Role in Pakistan National Energy Policy Coal-related Organization Coalfields in Pakistan Coal Resources, Production, and Quality Laws or Regulations Related to Coal Development Thar Coalfield Exploration History Geological Setting Meteorology and Hydrology Coal Recourses and Reserves Quality Other Coalfields in Sindh Lakhra Coalfield Sonda Jherruk Coalfield Badin Coalfield Lakhra Thermal Power Plant Power Development Plan Basic Policy for Power Development Plan Long-Term Power Demand Forecast Generation Planning Power Grid Expansion Plan Policy and Plan for Developing and Conducting the Coal Thermal Generation Plant Other Relevant Plans and Information Power Generation Applications and Tariff i

3 2.5.1 General Procedure of Application Tariff Structure Incentives on the Tariff Referential Tariff Generated by Coal Thermal Chapter 3 Thar Coalfield Development 3.1 Current Status of Each Block Block I Block II Block III Block IV Block V Block VI Geological Assessments Main Issues and Countermeasures in the Thar Coal Development Estimation of ROM Controlling Spontaneous Combustion Mining Technology for Surface Mining Mining Equipment and System Cost performance Japanese Coal Mining Technologies Hydrogeology Groundwater Situation Dewatering Development Information for Other Similar Coalfields Comparison with Other Coalfield of South Asia Chapter 4 Power Generation 4.1 Feasibility of Generation by Utilizing Thar Coal Development Plan for the Power Plants Constrained Condition in the Thar Coalfield Applicable Power Generation Plant in the Thar Coalfield Feasibility of Generation by Utilizing Gas Produced from Underground Gasification General Information UCG in the Thar Coalfield Coal Thermal Generation Technology in Japan utilizing the Lignite Coal Gasification Technology Coal Liquefaction Technology Other New Technology Superiority of Japanese Technology Chapter 5 Infrastructures 5.1 Transmission Line Present Situation Expansion Plan of 500kV Transmission Line Proposed Plan of 500kV Transmission Line Water Supply ii

4 5.2.1 Present Status Outline of the Plan Construction Schedule Cost Mine Water Disposal Present Status Outline of the Plan Cost Construction Schedule Road Present Situation Outline of the Road Improvement Plan Cost of the Improvement Plan Schedule of the Improvement Plan Consideration Other Relevant Infrastructure Thar Airport Thar Lodge Chapter 6 Candidate Project for the Japanese Yen Loan 6.1 Candidate Project for the Japanese yen Loan Thar Matiari 500kV Transmission Line Project Summary of the Project Applicability of Japan s Technique Implementation Schedule Project Cost Support to Construction of Power Plants Chapter 7 Environmental and Social Consideration 7.1 Introduction Current Natural and Social Situation General Current Status of Environmental Pollution Current Status of Natural Environment Current Status of Social Environment Environmental and Social Regulatory Framework of Pakistan Legal Framework for EIA National Environmental Quality Standards Environmental Impact Assessment (EIA) System Social Environment Screening and Categorization of the Project Transmission Line Project Other Indivisible Projects Scoping of the Environmental Impacts Transmission Line Project Other Indivisible Projects Chapter 8 Financial and Economic Analyses iii

5 8.1 Objectives and Methodology of the Financial and Economic Analyses Financial Analysis Economic Analysis Methodology Assumptions used in the Financial and Economic Analysis Project Life, Salvage Value, and Price Base Physical Contingency and Price Escalation Tariff Operation and Maintenance (O&M) Cost Conversion Factor Cut-off Rate Auxiliary Consumption and Transmission and Distribution Loss Use of Water and Coal for Generation Identification and Quantification of Financial and Economic Costs Financial Cost Economic Cost Identification and Quantification of Financial and Economic Benefits Financial Benefits Economic Benefits Conclusion of Financial and Economic Analyses FIRR and FNPV EIRR and ENPV Chapter 9 Conclusions and Recommendations 9.1 Conclusions Thar Coalfield Development Candidate Project for Transmission Line Recommendations Recommendation for Coalfield Development Recommendation for Power Generation Development APPENDICES Appendix 2-1 Appendix 2-2 Appendix 2-3 Appendix 2-4 Appendix 3-1 Appendix 4-1 Appendix 5-1 Appendix 5-2 Appendix 5-3 Appendix 7-1 Appendix 8-1 Functions of Thar Coal Energy Board, Sindh Coal Authority and Coal & Energy Departments PPIB (Private Power and Infrastructure Board) and NEPRA (National Electric Power Generation Authority) NEPRA Notice of Hearing for Development of Determination of Upfront Tariff for Coal Power Projects Assumption of Tariff for 600MW and 300MW Class Coal Thermal Generation Information of Panandhro Lignite Mine Basic Information for Thermal Power Generation Summary of Infrastructures in Thar Coalfield Route Map of Infrastructures in Thar Coalfield Route Map of Access Road to Thar Coalfield Preliminary Scoping of Environmental and Social Impacts of the Indivisible Projects Financial and Economic Analyses (300MW and 600MW) iv

6 TABLES Table Peak Power Generation and Demand Table Pakistan Coal Resources Table Coal Production by Coalfield Table Coal Consumption in Pakistan Table Import of Coal in Pakistan Table Coal Quality of Coalfields in Pakistan Table Broad Terms for Mineral Titles, Sindh Province Table Application Fees (Sindh Mining Concession Rules,2002) Table Annual Rental Fee Table Exploration Situation and Coal Resources Table Coal Qualities for Block I to XII Table Factors on Each Seam in Lakhra Coalfield Table Elements of Each Area in Sonda - Jherruck Table Quality of Badin Coal Table Main Characteristics of Lakhra Power Station Table Operation Data Table Forecasts for Selected Year Table Generation Expansion Plan Table Summary of Major Expansion Plan Up to Table Summary of Major Expansion Plan Up to Table Summary of Major Expansion Plan Up to Table Fuel Price Forecasts to the Year Table Least Cost Generation Plan (Base Case) Table List of Future Plan for Thermal Coal Generation Plants Table Summary of Jamshoro Thermal Power Plants Table Power Generation Application Procedure and Schedule Table Constitution of Tariff Table Levelized Tariff Proposed by PPIB Table Assumption of Tariff of Generation (1,000MW class) Table Coal Mine Development and Power Plant Plan Table Current Situation of Each Block in Thar Coalfield Table Selected Mining Method and Equipment Table Production Schedule (Excavation) Variant Mt/a T&S Table Mining Plan for Block II Table Characteristic of Aquifers Table Model Settings, Analytical Condition and Boundary Condition Table Analytical Parameter Table Analytical Cases Table Comparison of Geological Conditions between Thar Coalfield and Neyveli Coalfield Table Production and Strip Ratio in Neyveli Lignite Mine Table The Outline of Thermal Power Stations in the Neyveli Coalfield Table Development Plan of Power Plants Table Component Analysis of the Thar Coal Table Comparison of Steam Condition and Plant Efficiency Table Water Usage for Coal Thermal Power Plants Table Summary of USG in the Thar Coalfield Table Advantages of IGCC Table Development Status of Clean Coal Technology v

7 Table Development Plan of Power Plants in the Thar Coalfield Table Scope of Works for the 500kV Network Surrounding Matiari S/S Table List of Major Equipment for the 500kV Transmission Line between Thar and Matiari Table List of Major Equipment for the Extension of 500kV Matiari Switching Station Table Summary of Project Cost Table Comparison between AAAC and LL-TACSR/AS Table Comparison of Project Cost for 500kV Transmission Line between Thar and Matiari S/S Table Calculation of Pipeline and Pump Table Cost Estimation for Water Supply System Table Road Design Works of Segment-4 and Segment Table Design Vehicles for the Road Improvement Table Construction Cost of the Road Improvement Table Contents, Status and Schedule of Segments (as of 10 December 2012) Table Summary of Candidate Project for Japanese Yen Loan Table Comparison of Construction Cost in Consideration of Integral Plan Table Comparison of Transmission Line Loss Table Project Implementation Cost Table Groundwater Quality in Thar Coalfield Table Ambient Air Quality in Thar Coalfield Table Flora and Fauna and Threatened Species in the Survey Area Table National Environmental Quality Standard for Ambient Air Table National Environmental Quality Standard for Ambient Noise Table National Environmental Quality Standard for Municipal and Liquid Industrial Effluents Table Illustrative List of Sensitive Sectors, Characteristics, and Areas in JICA Guidelines and Pakistani Guidelines Table Screening and Categorization of Indivisible Projects Table Preliminary Scoping of Environmental and Social Impacts of the Transmission Line Project Table Financial Analysis for the Generation and Transmission Projects Table Economic Analysis for the Generation and Transmission Projects Table Assumption on Tariff of Coal Thermal Power Plant Table Terms of Trade Table Percentage of Wage Earners Earning below the Minimum Wage of Table Monthly Wages of Regular and All Workers by Type of Enterprise Table Calculation of Conversion Factor on Local Cost of Procurement and Construction Table Cut-off Yield of the Treasury Bills Table Calculation of Economic Price of Coal Table Financial Cost of the Generation Project upon Completion of Construction Table Financial Cost of the Transmission Project upon Completion of Construction Table Annual Allocation of Financial Cost (Generation) Table Annual Allocation of Financial Cost (Transmission) Table Economic Cost of the Project upon Completion of Construction (Generation and Transmission Alternative 1) Table Economic Cost of the Project upon Completion of Construction (Generation and Transmission Alternative 2) Table Annual Allocation of Economic Cost (Generation and Transmission Alternative 1) Table Annual Allocation of Economic Cost (Generation and Transmission Alternative 2) vi

8 Table Economic Price of Tariff Table Assumption on the Alternative Energy Sources Based on the Types of Consumers Table Average Electricity Consumption per Consumer Table Household Expenditure on Energy Table Economic Cost of Hi-Speed Diesel Oil (H.S.D) Table Variable Cost of Diesel Generation Table Fixed and Variable Costs of UPS Table Calculation of Saved Cost of Alternative Energy Sources Table FIRRs and FNPVs of the Projects Table Sensitivity Analysis for the Generation (FIRR & FNPV) Table Sensitivity Analysis for Transmission Alternative 1 (FIRR & FNPV) Table Sensitivity Analysis for Transmission Alternative 2 (FIRR & FNPV) Table EIRR and ENPV Table Sensitivity Analysis for Alternative 1 (EIRR & ENPV) Table Sensitivity Analysis for Scenario Alternative 2 (EIRR & ENPV) FIGURES Figure Peak Power Generation and Demand and Power Shortage Figure Location of Objective Area Figure Federal Organization Chart on Energy and Power Figure Sindh Province Organization Chart on Thar Coal Development Figure Coalfields of Pakistan Figure Coalfields in Sindh Province Figure Coal Production by Coalfield Figure Coal Consumption Figure Location map of Thar Coalfield, Sindh, Pakistan Figure Stratigraphic Sequence in the Thar Coalfield Figure Blocks, Cumulative Thickness and Cross Section Line in the Thar Coal Blocks Figure Generalized Cross Section through Block I, IV,II and III Thar Coal Blocks Figure Representative Borehole Sections in Thar Coalfield Figure Location of Borehole Sections in Thar Coalfield Figure Average Monthly Rainfall and Temperature Figure Bird s Eye View of Geography and Geology in the Study Area with Regional Groundwater Direction Figure Generalized Cross Section of Lakhra Coalfield Figure Generalized Stratigraphy of Workable coal seams Figure Located Relation of Lakhra Coal Mine and Power Station Figure Relation of Coal and Limestone Supply Figure Peak Demand Forecast for High, Base and Low Cases Figure Capacity Rate in Thar Coalfield on the Generation Expansion Plan Figure Increment of Generation Capacity in Thar Figure Existing Grid Map for 500kV and 220kV Systems Figure Expansion Plan Grid Map for 500kV and 220kV Systems Up to Figure Expansion Plan Grid Map for 500kV and 220kV Systems Up to Figure Expansion Plan Grid Map for 500kV and 220kV Systems Up to Figure Installed Capacity as of Figure Thar Coal Blocks Layout Figure Isopach Map of Block I Figure Cross-section along Boreholes of Block I vii

9 Figure Isopach Map of Block II Figure Cross-section along Boreholes on Block II Figure Isopach Map of Heating Values (ar base), Block II Figure Seam Correlation Chart of Boreholes around Block II Figure Seam Correlation Chart Line Figure Illustrations of Two Variants of Equipment Figure Infrastructure Situation of Block II Development in Figure UCG Production Process Figure Oracle Coalfields Mining Plan Figure Layout of Mining Area and Mine-mouth Power Plant in Block VI Figure Selective Mining Criteria Example Figure Full Mechanized Longwall Mining Method Figure General Layout of Single Prop and Iron Bar Method Figure Concept of the Room and Pillar Mining Method Figure Conceptual Layout of Saw Mining Method Figure Conceptual Cross Section of Hydraulic Mining Method Figure Aquifers in Thar Coalfield Area Figure Location Map of Thar and Neyveli Coalfields Figure Cross-Section Showing Different Aquifers in Block III, Thar Coalfield Figure Neyveli Lignite Deposit Aquifers Figure Schematic Diagram of Electricity Generation Figure Candidate Sites of the Power Plant Figure CAD Model of Lignite Coal Combustion Boiler Figure Process Flow of Circulating Fluidized-Bed Combustion Boiler Figure Hot Day Power Loss Figure Typical Environmental Pollution Control Facility Figure Typical Desulphurization Process Figure Recommendation of Boiler Type for Thar Coal Figure Schematic Model System of UCG in the Thar Coalfield Figure Configuration of CCT for Power Generation in Japan Figure Schematic Diagram of Demonstration Plant and the Structure of Gasifier Figure System Outlook for the Future of Zero-emission Technology Figure Typical Flow of Direct Liquefaction Process Figure Typical Flow of Indirect Liquefaction Process Figure UBC Process Diagram Figure New Slurrification Process for Low Rank Coal Figure Property Change of Low Rank Coal Figure Schematic Diagram of Brown Coal Drying System Figure /220 kv Grid Map Surrounding Sindh from 2016 up to Figure Scope of Works for the Expansion of 500kV Network System by Fund Source Figure Route Map of the 500kV Transmission Line between Thar and Matiari Figure Tentative Construction Schedule Figure Operation Method of 500kV Transmission Line (Original Plan) Figure Operation Method of 500kV Transmission Line (Proposed Plan) Figure Section of LL-TACSR/AS Figure NDP Project Map Figure Water Supply Scheme from LBOD Figure Route Map of the Access Road to the Thar Coalfield Figure Schematic Route Map Figure Route of Port Qasim Road viii

10 Figure Typical Cross Section of the Segment Figure Typical Cross Section of the Segment Figure Location of New Bypasses Figure Overall Development Plan for the Thar Coalfield Figure Summary of Candidate Project for Japanese Yen Loan Figure Implementation Schedule Figure Location Map of Runn of Kutch, Ramsar Site Figure Environmental Impact Assessment Process in Pakistan Figure Saved Cost ix

11 Abbreviations AAAC : All Aluminum Alloy Conductor AASHTO : American Association of State Highway and Transportation Officials ACGR : Annual Compound Growth Rate ACSR : Aluminum Conductor Steel Reinforced AJK : Azad Jammu and Kashmir ADB : Asian Development Bank AR : As received basis B.P. : Beginning Point BWE : Bucket Wheel Excavator CCPP : Combined Cycle Power Plant Cct : Circuit CFBC : Circulating Fluidized Bed Combustion CPP : Capacity Purchase Price CRME : Coal Resources & Mining Engineering Co. Ltd CSA : Coal Supply Agreement D/C : Double Circuit DISCO : Distribution Company EAGLE : Coal Energy Application for Gas, Liquid & Electricity EIA : Environmental Impact Assessment EIRR : Economic Internal Rate of Return EPP : Energy Purchase Price EPS : Electro-Static Precipitator ESIA : Environmental and Social Impact Assessment FBC : Fluidized Bed Combustion FDF : Forced Draft Fan FIRR : Financial Internal Rate of Return FO : Fuel Oil FS : Feasibility Study FSA : Fuel Supply Agreement FY : Fiscal Year starting on 1 st July ending on 30 th June in Pakistan GENCO : Generation Company GOP : Government of Pakistan GOS : Government of Sindh GPS : Global Positioning System GSA : Gas Supply Agreement GSP : Government of Sindh Province HPP : Hydro Power Plant HVDC : High Voltage Direct Current IEE : Initial Environment Examination IEEJ : The Institute of Electrical Engineers of Japan IGCC : Integrated Coal Gasification Combined Cycle IGFC : Integrated Coal Gasification Fuel Cell Combined Cycle IUCN : International Union for Conservation of Nature IPP : Independent Power Producer JCF : JCF Coal Fuel JCOAL : Japan Coal Energy Center JGC : JGC Corporation JICA : Japan International Cooperation Agency KESC : Karachi Electric Supply Company L/A : Loan Agreement LBOD : Left Bank Outfall Drain LC : Local Currency LCDC : Lakhra Coal Development Company LL-TACSR : Low Electrical Power Loss Thermal Resistant Aluminum Alloy Conductor x

12 Steel Reinforced / Aluminum-clad Steel Reinforced LPGC : Lakhra Power Generation Company LOI : Letter of Intent LOS : Letter of Support LRC : Low Rank Coal MCR : Maximum continuous rating N-5 : National Highway No.5 NDP : National Drainage Program NEDO : New Energy and Industrial Technology Development Organization NHA : National Highway Authority MHI : Mitsubishi Heavy Industries, LTD NEPRA : National Electric Power Regulatory Authority NEQS : National Environmental Quality Standards NPSEP : National Power System Expansion Plan NTDC : National Transmission & Despatch Company NWFP : North-West Frontier Province OB : Overburden O&M : Operation and Maintenance ODA : Official Development Assistance PC : Pulverized Coal PEPCO : Pakistan Electric Power Company PF : Pulverized Fuel PMDC : Pakistan Mineral Development Corporation PPIB : Private Power Infrastructure Board PPP : Public-Private Partnership RAP : Resettlement Action Plan RC : Railway Crossing RO : Reverse Osmosis Rs. : Pakistan Rupees SCA : Sindh Coal Authority S/C : Single Circuit SECMC : Sindh-Engro Coal Mining Company Seg : Segment TCEB : Thar Coal & Energy Board TDS : Total Dissolved Solids TOE : Ton of Equivalent UCG : Underground Coal Gasification UBC : Upgraded Brown Coal USGS : United States Geological Survey WAPDA : Water and Power Development Authority WB : World Bank WUL : Water Usage License W&S : Works and Services Department Exchange Rate (as of October, 2012) 1 US dollar = 95.4 Pakistan Rupee 1 Japanese Yen = 1.21 Pakistan Rupee (Unless otherwise specified) xi

13 EXECUTIVE SUMMARY

14 Executive Summary Executive Summary 1. Objectives The Survey aims the following set objectives in order to achieve a stable power supply in Pakistan: 1) To study the feasibility of utilizing the Thar coal for power generation, 2) To survey the necessity of developing the coalfield, coal procurement system, and power generation and transmission, and 3) To survey and examine the potential assistance for infrastructure development, such as installation of transmission lines, securing water for distribution, and development of roads for transporting coal. 2. Thar Coalfield Development (1) Summary of the Thar Coalfield Sindh Province has a total coal resource of billion tons, of which mostly are found in Thar area having billion tons reserve. A brief description of the Thar coalfield and quality of coal are cited below: 1) Thar Desert Area : 22,000 km 2 2) Coalfield Area : 9,100 km 2 3) Coal Resources : billion tons 4) Chemical Analysis of Coal (AR: as received basis) Moisture (AR) : 46.77% Ash (AR) : 6.24% Volatile Matter (AR) : 23.42% Fixed Carbon (AR) : 16.66% Sulphur (AR) : 1.16% Heating Value (AR) : 5,774 Btu/lb (3,208 kcal/kg) Coal Rank : Lignite-B to Lignite -A As the lignite coal has high moisture contents generally, and low heating value, it is usually suitable for domestic use, not for export. (2) Status of the Thar Coal Development The Government of Sindh has established and opened 12 blocks, 1,432km 2 in total (Block I to 1

15 Data Collection Survey on Thar Coal Field Block XII, of which Block III was divided into two) in the Thar coalfield, of which four blocks listed below are currently being developed: Table 1 Current Situation of Each Block in the Thar Coalfield Block Developer Exploration License Granted Bankable F/S Completed Mining Lease Issued ESIA for Mining Accepted Mining Start Planned Coal coming Note I II V Global Mining Company of China 10.0 Mt/a Sindh Engro Coal Mining Company 6.5 Mt/a (Initially 3.5 Mt/a) UCG Pilot Project by GoP October 2011 August 2009 August 2010 March 2012 May 2012 February 2012 EIA Public Hearing was done on 27 September 2012 EIA public hearing will be held in November 2012 In 2013 In 2013 Test burn conducted in December 2011and Syngas produced 3 years from the starting mining 3 years from the starting mining Financing of the project is being arranged. Financing of the project is being arranged Presently the 8-10 MW Power Plant is being established at the cost of Rs.1.8 billion VI Oracle Coalfields, PLC 2.4 Mt/a November 2007 October 2011 April 2012 In near future In years from the starting mining JDA was concluded with KESC Source: TCEB Note: For the mining of coal in Thar, all license/leases are approved by the Thar Coal and Energy Board Global Mining Company of China have got No Objection Certificate (NOC) from Sindh Environmental Protection Agency (SEPA) on EIA on 29 Nov.2012 Progress of Block I and Block II is ahead among the others planned. Summary of mining plan for Block II is shown below. In addition, since public hearing for ESIA is completed already, Block II will be possibly developed by 2013 year. 1)Total production : 360~380 million tons of lignite 2) Production level : First phase 6.5 million tons (for 1,200 MW) Second phase 13.0 million tons (for 2,400 MW) Third phase 22.8 million tons (for 4,000 MW) 3) Mining method : Surface mining (Open cut method) Truck & Shovel 4) Mining area : One-third of the southern of Block II with an area of about 20 km² is the initial mining area 5) Overburden removal : Overburden from construction and initial stage will be dumped outside the dumping area located in the eastern corner of Block II. The dumping site will have a capacity of 586 million m 3 and can accommodate a maximum height of 88 m. (3) Thar Coal for Power Generation The coal is lignite having low calorific value of 3,208kcal/kg, which is relatively low compare with general coal for generation having calorific value of 5,000~6,000kcal/kg, and the high moisture of around 47%. As the almost of all coal are imported from abroad in Japan, there is no coal thermal plant 2

16 Executive Summary utilizing same quality of coal in Thar. However, there are some countries that have the power plants utilizing the similar quality of coal of Thar. Therefore there no issues utilizing Thar coal for power generation. (4) Applicable Japanese Technology The average depth of coal in the Thar coalfield is 170 m, wherein the above 50 m is made up of loose sand. Open cut mining is suitable in the Thar coalfield. However, most of the coalfields in Japan adopt underground mining and only minor cases of open cut mining. Hence, there is no Japanese technology applicable for open cut mining of coal. 3. Power Generation (1) Development Plan of Power Generation At present, the developers for the three blocks, namely, Block I, Block II, and Block VI in the Thar area have initiated their development of power generation, as listed in Table 2. Developer Capacity Souse : TCEB Table 2 Development Plan of Power Plants Block I Block II Block VI Global Mining Company of China 900 MW Engro Powergen Initial phase: 600 MW Final phase: 1200 MW Oracle Initial phase: 300 MW; Final phase: 1100 MW (2) Recommended Generation Facilities Boiler types recommended to be applied in the Thar coalfield are CFBC and PC with up to 300 MW(Sub Critical) and 600 MW(Super Critical ) unit generation capacities, respectively. As for the cooling system, since ambient temperature is very high in the Thar area, efficiency needs to be decreased in case of dry condenser cooling type. Therefore, it is recommended to apply wet cooling system. (3) Applicable Japanese Technology Japanese clean coal technologies such as IGCC and gasification, take into account high-efficiency and reduction of environmental burdens. However, there have been protests against these technologies at present, and corresponding price values are relatively high. Therefore, Japanese technology is not recommended to be applied in the Thar coalfield at present. 3

17 Data Collection Survey on Thar Coal Field However, if the mine-mouth power plants utilizing the Thar coal will operate steadily in the future, it is necessary to reconsider the clean coal technology of Japan. 4. Infrastructures Important infrastructures such as ttransmission line, water supply, effluent disposal, and road are currently under development as shown in Table 3. The budget have been allocated for the latter three infrastructures by the Government of Sindh, and the design and construction have been started. As for the transmission line, it is necessary to provide support for the construction fund. Table 3 Current Situation of the Development of Infrastructures No. Type of Infrastructure Budget Allocation Progress 1. Transmission Line Budget is not allocated F/S is completed already 2. Water Supply Budget is allocated by the Government of Sindh Construction stage will start in Mine Water Disposal Budget is allocated by the Government of Sindh Construction stage will start in Road Budget is allocated by the Government of Sindh Construction stage will start in 2013 Source:TCEB 5. Candidate Projects for Japanese Yen Loan (1) Transmission Line Candidate projects for Japanese yen loan are shown in Table 4. It is noted that there are two alternatives applicable as conductor for transmission lines. However, although its initial cost is high, it is recommended to adopt LL-TACSR/AS conductor of Japanese technology based on the conclusion derived from the financial analysis. Outline of the candidate projects are described in Chapter 6. Table 4 Candidate Projects for Japanese Yen Loan Unit: Rs. million Alternative 1 Alternative 2 Description AAAC Araucaria LL-TACSR/AS 750 mm 2 1) Construction of the 500 kv Transmission Line (250 km, 2 cct.) 15, , ) Expansion of the Matiari S/S (2 line bays with SR) 1, , Total Construction Cost 16, , Source: Prepared by the JICA Survey Team Note: Above cost is based on PC-1 for interconnection of Thar Coal Based 1200 MW Power Plant with NTDC system. 4

18 Executive Summary Above cost excludes price escalation, contingency, consulting services of eligible cost, non-eligible cost, interest and commitment charge. (2) Power Generation Plants Currently, the construction of power generation plants is planned by private sector by IPP. Where the investment for the IPP by private sector will not proceed, JICA has potential to finance the Yen loan to construct the power plants through the Government of Pakistan. 6. Environmental and Social Considerations The candidate project for Japanese yen loan involves the construction of a 500 kv transmission line with a 250 km length. The project needs to compensate affected farmers for their agricultural land even though it is expected that said project will not cause destruction of the natural protected area, and deforestation. According to JICA guidelines, the project could be classified as Category A. Moreover, according to a local regulation in Pakistan, the candidate project is classified as transmission lines (11 kv and above) and grid station in Schedule II; and hence, the project needs to undergo the official procedure for EIA approval as prescribed under the Pakistan legislation. In addition, since the candidate project is applied as an indivisible project, it is necessary to undergo the procedure for EIA as a relevant project. Screening and categorization of indivisible projects are shown in Table 5. Projects Table 5 Screening and Categorization of Indivisible Projects Categories by JICA Guideline, 2010 Appendix3 PEPA (Review of IEE and EIA) Regulations, 2000 Coal Mining Projects A Sensitive Sector EIA Thermal Power Generation A Sensitive Sector EIA 1,200MW (over 200MW) Road Project A Sensitive Sector EIA Water supply A Sensitive Sector EIA Mine Water Disposal A Sensitive Sector (as a reservoir) IEE Source: JICA Survey Team based on JICA Guidelines and PEPA Regulations Federal or provincial highways or major roads greater than Rs. 50 million in value. Major urban water supply infrastructure, including major head works and treatment plants. Dams and reservoirs with a storage volume less than 50 million m 3 or surface area less than 8 sq km) 5

19 Data Collection Survey on Thar Coal Field 7. Economic and Financial Analysis Economic and financial analyses were done for constructing 500kV 250km transmission line and 1,200MW power generation. (1) FIRR and FNPV Benefits and costs are compiled and calculated considering the 2012 prices in order to obtain the financial investment rate of return (FIRR). Moreover, the opportunity cost of capital (12%) is used as the discount rate for calculating the financial net present value (FNPV). The power generation project showed a positive NPV and slightly higher return than the cut-off rate for FIRR. However, it should be noted that this return can only be achieved if the cost of the generation is immediately translated into tariff. If the tariff approval by NEPRA and the notice of the government s gazette are delayed and/or the petition on tariff increase is partially approved or disapproved, the rate of return of the generation project will reduce accordingly. Both alternatives for the transmission project showed negative NPVs and below the cut-off rate for FIRR (12%). The FIRRs of the transmission projects are significantly lower than the cut-off rate. This is because the same fixed tariff is applied regardless of the length of the transmission line. The longer the transmission line, the lower the IRR because of the higher capital cost. However, as the peak demand increases after the completion of other Thar generation projects, the FIRRs of the transmission project alternatives are expected to increase. Table 6 FIRR and FNPV Case FIRR FNPV (Rs. million) FNPV (US$ million) Generation 14.1% 22, Transmission (Alternative 1) 4.0% (8,479) (89) Transmission (Alternative 2) 1.6% (13,140) (138) Source: Prepared by the JICA Survey Team The FIRR of Transmission (Alternative 2) is lower than Transmission (Alternative 1). This is due to the fact that the capital cost of the former is more expensive than the latter at the initial stage, while the expected transmission loss is almost the same between the two alternatives. However, if the cost for accommodating the future expansion of generation is taken into consideration, the additional cost of Alternative 2 amounting to Rs.0.8 billion is significantly smaller compared to Alternative 1 at Rs.13 billion. As a result, the total cost of Alternative 2 amounting to Rs.22.9 billion becomes smaller than Alternative 1 at Rs.30.4 billion, and hence, the FIRR of the former is expected to be higher than that of the latter. 6

20 Executive Summary (2) EIRR and ENPV Benefits and costs are compiled and calculated using the economic cost, in order to obtain the economic internal rate of return (EIRR). Moreover, a social discount rate of 12% is used to calculate the ENPV. Table 7 EIRR and ENPV Case EIRR ENPV (Rs. million) ENPV (US$ million) Generation + Transmission (Alternative 1) 28.9% 242,181 2,539 Generation + Transmission (Alternative 2) 28.9% 237,995 2,495 Source: Prepared by the JICA Survey Team In both cases, the economic benefit is ensured as the EIRRs are significantly higher than the cut-off rate (12%), and the ENPVs are positive. Thus, the project can be justified for implementation as it contributes to the national economy s enormous savings from the alternative energy sources. 7

21 Location Map Source:UNITED NATIONS CHINA AFGHANISTAN Islamabad Lahore IRAN PAKISTAN Thar Coalfield INDIA ARABIAN SEA Karachi Source:JICA Survey Team

22 CHAPTER 1 INTRODUCTION

23 Chapter 1 Introduction Chapter 1 Introduction 1.1 Background of the Survey Present Situation of the Power Supply and Demand In the Islamic Republic of Pakistan (hereinafter referred to as Pakistan ), the power demand has increased to 9.3% per annum in the past ten years along with the economic growth of the country. However, the power supply capability could not catch up with the power demand that continue to increase year after year. Consequently, about 6,105 MW power supply-demand gap was recorded in the summer of While the peak demand was 18,860 MW, the actual generating capacity is 12,755 MW only, though the installed capacity is approximately 21,000 MW. Under these circumstances, people of the country have been forced to accept the scheduled power outage for about 8 hours a day on the average. The power outage has caused difficulties in people s lives and development of agriculture, which needs power for irrigation. The industry has also suffered a great loss due to power outage, causing unemployment and high cost of finished products. Therefore, reduction of the power supply-demand gap on the power sector of the country is urgently required. Table shows the peak generation power, peak demand, power shortage, and power shortage ratios against the peak demand from 2001 to 2011, while Figure illustrates the trend of the parameters shown in Table Table Peak Power Generation and Demand Year Peak Peak Demand Power Power Shortage Generation Shortage Rate Power [MW] [MW] [MW] [%] ,894 10, ,958 11, ,834 11, ,792 12, ,600 13,847 1, ,292 15,838 2, ,442 17,398 4, ,637 17,852 4, ,413 18,583 5, ,163 18,521 5, ,755 18,860 6, Source: Presentation Documents for Participants of 10 th SMC of National Institute of Management, Karachi 1-1

24 Data Collection Survey on Thar Coal Field 20,000 PeakGeneration Power, Peak Demand, Power Shortage [MW] 15,000 10,000 5,000 0 Peak Generation Power Peak Demand Power Shortage Year Source: Presentation Documents for Participants of 10 th SMC of National Institute of Management, Karachi Figure: Peak Power Generation and Demand and Power Shortage For the power generation mix in the country, almost 37% comes from oil thermal, 31% hydro, 30% gas turbine, 2% nuclear, and 0.1% coal thermal. Coal thermal power generation in the neighbouring countries India and China are more than 50% and 80%, respectively. Compared to these countries, the dependency on coal thermal is relatively low in Pakistan. Oil thermal generation is the most dependable fuel in Pakistan at present; however, oil cost remains high and is fluctuating in the international market, which indicates that oil unfortunately cannot be a suitable fuel. Utilizing coal and renewable energy including hydro, which are presently available energy sources in Pakistan for generation, are the most essential means of securing stable power Political Measures on Energy Sector and Development Plan In "Vision 2030" and "Medium Term Development Framework (MTDF) ", which are highly ranked policies of the country, Pakistan formulates the energy policies consisting of i) developing the power sources by utilizing the domestic resources such as hydro power, coal, and natural gas, ii) promoting the power generation by public private partnership, iii) promoting the privatization of all power sectors, and iv) reducing the power system losses. In addition, the Government of Pakistan has announced its energy policy that the power supply should increase to around 24,000 MW by 2020, in which 13,200 MW is expected to be from coal thermal generation. Under such circumstance, JICA has decided to conduct data collection survey (hereinafter referred to as the Survey ) in order to collect and organize the necessary information to examine potential assistance for infrastructures, such as transmission line, water supply and road access. 1-2

25 Chapter 1 Introduction Latest Government Decision According to a write up released on 4 October 2012, the Government of Pakistan has decided on 3 October 2012 that Thar coal will be used for coal based power generation, and all conversions of existing and construction of new power projects will be designed on the basis of Thar coal specification, throughout the country. The decision encourages both public and private sectors to join in the development of Thar coal. 1.2 Objectives of Survey Islamabad Objectives of the Survey Lahore For achieving stable power supply in Pakistan, the following are the set objectives of the Survey: 1) To study the feasibility of utilizing the Thar coal Source: JICA Survey Team for power generation; 2) To survey the necessity of developing the Figure Location of Objective Area coalfield, coal procurement system, generation and transmission; and 3) To survey and examine the potential assistance for infrastructures such as construction of transmission lines, securing water for generation and development of roads for transporting the coal. Karachi Lakhra Coal Field Sonda Thatta Coal Field Thar Coal Field Survey Areas The main survey area is the Thar coalfield shown in Figure In addition, as reference, existing coalfield and coal thermal power plant in Lakhra, as well as Sonda coalfield are included in discussing the subject survey area. 1.3 Scope of the Survey The following are the contents of the Survey: 1) Review of coalfield developments in Pakistan; 2) Collect and analyze the data on the development of Thar coalfield; 3) Review power development plan; 1-3

26 Data Collection Survey on Thar Coal Field 4) Review power generation development plan; 5) Review the present infrastructures surrounding and/or relevant to the coal thermal power station; 6) Conduct economic and financial analyses; and 7) Hold seminar in Karachi in January Survey Schedule The entire survey schedule is about six months, from September 2012 to February The first field survey in Pakistan was conducted from September 17, 2012 to October 16, The second and third field surveys in Pakistan are to be conducted in November 26, to December 15, 2012 and January 2013, respectively. Submission schedule of reports during the survey period is as follows: 1) Inception report: end of September ) Interim report: middle of November ) Draft final report: early January ) Final report: middle of February

27 CHAPTER 2 BASIC DATA AND INFORMATION

28 Chapter 2 Basic Data and Information Chapter 2 Basic Data and Information 2.1 Coalfield Developments in Pakistan Coal Role in Pakistan National Energy Policy Pakistan does not have a national coal policy. The Government of Pakistan National Mineral Policy (September 1995) states clearly in its Chapter 2 that minerals are a provincial subject under the Constitution, except oil, gas, and nuclear minerals and those occurring in special areas. Therefore, coal development works are under the provincial governments. Small private mining companies are producing more than half of coal production in Pakistan for supply to the brick and cement industries in each province. The GoP announced a private power policy entitled Policy for Power Generation Project 2002 which focuses on the use of indigenous resources, especially coal, for power generation 1. The Thar coal development goes forward under the policy. Coal had historically been the primary fossil fuel in Pakistan with the major consumers being railways and cement, fertilizer and power plants. This was true until large deposits of oil and natural gas were discovered in the 1960s 2. As of 2006, coal shared 7% of Pakistan s total primary energy consumption, compared to natural gas at 45%, oil at 33%, and hydroelectricity at 13% (EIA, 2008). Given the increasing costs of imported energy, Pakistan is, however, now seeking to expand the share of coal in its energy mix to 19% by 2030 and to 50% by The Energy Security Action Plan has set a target of generating 20,000 MW power from coal by There is presently only one plant in the country that uses coal as fuel, i.e., the 150 MW Lakhra Power Plant in Lower Sindh. However, the coal thermal plant can only presently generate 35 MW power using coal from Lakhra. There is limited production of oil and natural gas, and even more limited production of coal. No coal has been produced in the Thar coalfields, the seventh largest lignite field in the world, after being discovered in the 1990s. Some amounts of coals are imported, which have much higher quality than the indigenous coal in Thar. According to Pakistan Energy Yearbook 2011, total coal consumption, coal domestic production, and imported coal in were 7,717,149 tons, 3,450,091 tons, and 4,267,058 tons, respectively. Coal comprises 10.4% (4,025,380 TOE) of the final energy consumption (38,841,783 TOE) in The occupancy state of coal in the total energy consumption is stably low at 10% to 13%. Main users of coal are brick-kiln and cement industries. Pak Steel 1 Raja Pervez Ashraf, Federal Minister of Water & Power, July Coal, Pakistan & Gulf Economist, July The figures are changed in NTDC National Power System Expansion Plan

29 Data Collection Survey on Thar Coal Field uses imported bituminous coal at 429,000 tons/year and WAPDA coal thermal power plant burns up only 93,000 tons of Lakhra coal per annum. While Lakhra Coal Development Company (LCDC), a main coal supplier to GENCO, says that their original consumption plan was about 750,000 tons per annum, and 300,000 tons per annum as of , their consumption as of is only 93,000 tons as stated above. The decrease in consumption is only due to GENCO Lakhra Power Station. The LCDC mine has a capacity of production of 800 tons/day (800 tons x 300 days = 240,000 tons/annum). However, LCDC s production level is less than 200,000 tons/annum due to WAPDA s reduced consumption. Summarizing the above, coal plays a minor role in the energy planning in Pakistan. After Thar coalfield was discovered early in the 1990s, Thar coal has drawn the attention of energy policy planners as an unlimited indigenous fuel. Thar coalfield has immense coal resources of 175 billion tons that would be sufficient for generating 100,000 MW of electricity for 300 years. However, the development of Thar coalfield made not the slightest progress for a long time. Circular debt, week financial position of energy companies, falling gas production, high dependence on oil and gas at over 80%, low exploitation of indigenous coal and hydro resources, and unutilized power generation capacity owing to fuel supply constraints are leading to severe energy shortages. 5. The GoP has decided that in the future, only Thar coal would be used for thermal power generation. In the future, all conversions of existing power projects and construction of new ones will be on the basis of Thar coal specifications throughout the country 6. This is the foundation of an energy policy which is based on Pakistan s indigenous resources today Coal-related Organization Organizations related to coal development in the federal government are shown in Figure Also, the Sindh Province organization chart on Thar coal development is shown in Figure NEDO study Presentation by Aamer Mehmood, Research Officer, Planning Commission, Planning & Development Division at IEEJ, May News, Oct. 5,

30 Chapter 2 Basic Data and Information Government of Pakistan Ministry of Planning and Development (MPD) Ministry of Petroleum and Natural Resources (MPNR) Ministry of Water and Power (MPNR) Ministry of Industry (MOI) Geological Survey of Pakistan (GSP) DISCO PAKISTAN PETROLEUM LIMITED GENCO Pakistan Mineral Development Coap. (PMDC) NTDC Lakhra Coal Development Coap. (LCDC) PPIB Oil and Gas Development Coap. (OGDC) NEPRA Sui Northern Gas Coap. Sui Southern Gas Coap. KESC IPPS Private Pakistan State Oil Coap. Source: JICA Survey Team Figure Federal Organization Chart on Energy and Power Government of Sindh Province Coal and Energy Development Department Major Task - Development of coal resources - Grant of license, permits, leases for coal mining Sindh Coal Authority Main Subjective - To attract potential investors to establish integrated projects of coal-mining and coal-fired power plants in Sindh Major Task - To develop infrastructures for coal related projects - To accelerate the pace of activities relating to responsible for planning, promoting, organizing, undertaking appropriate projects in this behalf and implementing programmed for exploration, development, exploitation, mining, processing and utilization of coal Thar Coal and Energy Board Major Task - One-stop organization on behalf of all the ministries, departments and agencies of the GoP and the GoS in the matters relating to formulation of policies - To accord approval of projects for coal mining in Thar and for coal fired power generation plants or for other uses of Thar coal for other uses of Thar coal. Compositions of Thar Coal and Energy Board - Chief Minister Sindh - Federal Minister for Water & Power - Federal Minister for Finance - Federal Minister for Law and Justice - Deputy Chairman, Planning & Commission - Province Minister (Irrigation) - Province Minister (Revenue) - Province Minister (Finance) - Woman MNA from Thar - region - Federal Secretary, Ministry of Water and Power - Chief Secretary, Government of Sindh - Secretary, Coal & Energy Development Dept. - One Eminent Person - Managing Director, TCEB Source: TCEB Figure Sindh Province Organization Chart on Thar Coal Development 2-3

31 Data Collection Survey on Thar Coal Field Coalfields in Pakistan The presence of coal deposits in Pakistan was known before independence. Seventeen coalfields are confirmed, locations of which are shown in Figure 2.1-3, and the other coal occurrences are observed all over Pakistan. Coal resources in Punjab and Balochistan provinces were developed before the World War II. Its economic value was highlighted in 1980 when large coal resources were discovered in the Lakhra and Sonda areas of Sindh Province. In the 1990s, the discovery of Thar coalfield depositing 175 billion tons at an area of about 9000 km 2 in the Tharparker District of Sindh Province puts Pakistan up as the world s fourth largest coal resources country. Mining takes place in a number of areas. Recently, the production from Balochistan Province was more than half of Pakistan s annual output. All coals are extracted manually and come from small underground mines. There are several hundred mines (IEA 2004). The well-developed Figure Coalfields of Pakistan coalfields in Pakistan are located in Punjab, Balochistan, and Sindh, which are situated in three distinct areas termed as coal provinces, while there are other coalfields in NWFP and the northern state, which are being exploited on small scale. Figure shows the positions of these coalfields. 2-4

32 Chapter 2 Basic Data and Information Source: Original Base Map of Sindh Coal Authority (Coalfields of Sindh) Figure Coalfields in Sindh Province (1) Sindh Coalfields Sindh Province has total coal resources of billion tons. The quality of coal is mostly lignite-b to sub-bituminous A-C. Locations of six major deposits are shown in Figure Brief descriptions of major coalfields are as follows: 1) Lakhra Coalfield a. Distance from Karachi 193 km b. Area 1,309 km 2 c. Coal Reserves billion tons d. Chemical Analysis of Coal: Moisture (AR) 28.9% Ash (AR) 18.0% Volatile Matter (AR) 27.9% Fixed Carbon (AR) 25.2% Sulphur (AR) 4.7% to 7.0% 2-5

33 Data Collection Survey on Thar Coal Field Heating Value (Ave.) 4,622 Btu/lb to 7,554 Btu/lb (2,568 kcal/kg to 4,197 kcal/kg) e. The exploration and evaluation of North Lakhra coalfield have been sponsored with an estimated cost of Rs.38,516. The study is presently at the exploration stage. 2) Sonda-Jherruck coalfield a. Distance from Karachi 150 km (approx.) b. Identified Area 1,206 km 2 c. Shallowest Coal Bed 37.8 m d. Deepest Coal Bed m e. Coal Resources billion tons f. Chemical Analysis of Coal: Moisture (AR) 31.23% to 34.72% Ash (AR) 7.69% to 14.7% Volatile Matter (AR) 27.9% Fixed Carbon (AR) 25.2% Sulphur (AR) 1.38% to 2.82% Heating Value (Ave.) 6,780 Btu/lb to 11,029 Btu/lb (3,767 kcal/kg to 6,127 kcal/kg) 3) Indus East coalfield a. Explored Area 616 km 2 b. Drill Holes 16 c. Thickest Coal Bed 2.40 m d. Coal Resources 1.5 billion tons e. Chemical Analysis of Coal: Moisture (AR) 33.1% Ash (AR) 15.2% Volatile Matter (AR) 27.7% Fixed Carbon (AR) 23.9% Sulphur (AR) 2.6% Heating Value (Ave.) 6,300 Btu/lb to 8,000 Btu/lb (3,500 kcal/kg to 4,444 kcal/kg) Coal Rank Lignite-B to Sub-bituminous-B 4) Thar coalfield a. Thar Desert Area 22,000 km 2 b. Coalfield Area 9,100 km 2 c. Total Drill Holes 217 d. Coal Resources billion tons e. Chemical Analysis of Coal: Moisture (AR) 46.77% Ash (AR) 6.24% Volatile Matter (AR) 23.42% Fixed Carbon (AR) 16.66% Sulphur (AR) 1.16% Heating Value (Ave.) 5,774 Btu/lb (3,208 kcal/kg) Coal Rank Lignite-A to Lignite-B Data Source 7 5) Metting-Jhimpir coalfield The coalfield is situated 128km from Karachi, The area of 896km 2 is near the railway station. Small amount of coal are produced. 6) Badin coalfield The coalfield is new still in geological exploration stage. Section shows the outline. 7 Harnessing of Coal Resources of Sindh Province December 2003, Sindh Coal Authority 2-6

34 Chapter 2 Basic Data and Information (2) Balochistan Coalfields The coal seams in Balochistan are found in Ghazig Formation of Eocene Age. The quality of the coal is sub-bituminous A to high volatile bituminous B. There are five known coalfields that mostly lie around Quetta. 1) Sor-Range - Deghari Coalfield Sor-Range - Deghari coalfield lies 13 km to 25 km southeast of Quetta covering an area of about 50 km 2 and is easily accessible through a metalled road from Quetta. The northern half of the field is known as Sor-Range while Deghari is situated in the southern end of the field. The thickness of the coal seam varies from 1.0 m to 2.0 m but in Sor-Range, seam sections up to 5.0 m have been encountered. The Sor-Range coal is of better quality, with low ash and sulphur content. The quality of the coal is high sub-bituminous A to high volatile bituminous B. The following is the average composition: Moisture 3.9% to 18.9% Volatile Matter 20.7% to 37.5% Fixed Carbon 41.0% to 50.8% Ash 4.9% to 17.2% Sulphur 0.6% to 5.5% Heating Value 11,245 Btu/lb to 13,900 Btu/lb (6,247 kcal/kg to 7,722 kcal/kg) 2) Chamalang Coalfield This coalfield is newly discovered and needs detailed exploration and development. The GSP, which did the preliminary work in these areas, has indicated that it has a good potential. The quality of coal is better compared to the coals produced in the rest of Balochistan. The rank of coal ranges from high volatile bituminous C to high volatile bituminous A with a total resource of 6 million tons. Its heating value is over 12,000 Btu/lb (6,670 kcal/kg). It may be a coking coal. 3) Duki Coalfield Coal seams in Duki are in the lowest part of Ghazing Formation. It shows a variation in thickness from 0.15 m to 2.3 m. Geological structure is formed in syncline. The rank of the coal ranges from sub-bituminous B to sub-bituminous C with high volatile matter and high sulphur contents. The resource is 56 million tons. 4) Khost-Sharing-Harnai Coalfield Khost-Sharing-Harnai coalfield lies about 40 km east of Quetta and found in the anticline and syncline structure trending northeast to southwest with many faults. Coal seams show steep dipping of more than 40 degrees. Workable coal seams consist of three seams (upper seam: 0.4 m- 0.7 m, middle seam: 0.7 m- 1.0 m, lower seam: 0.5 m). The Khost-Sharing-Harnai coal is of better quality with high heating value. The coal rank is sub-bituminous B to high volatile 2-7

35 Data Collection Survey on Thar Coal Field bituminous A. The total resource is 88 million tons, of which 13 million tons are measured and 75 million tons are indicated and inferred. 5) Pir Ismail Ziarat Coalfield Pir Ismail Ziarat coalfield lies southeast of Quetta. Several coal seams are confirmed in the complex geological structure. Upper seam (0.6 m 0.7 m) and lower seam (0.4 m-0.45 m) are workable. The coal rank is sub-bituminous A to high volatile bituminous B. 6) Mach Abegum Coalfield Mach Abegum coalfield lies southeast of Quetta with an area of about 40 km 2. More than 17 coal seams are confirmed, three of them are workable with maximum coal thickness of 1.5 m. The quality is reported as having heating value of 5,500 kcal/kg, moisture of 12%, and sulphur content of 4.0%-5.5%. The coal rank is sub-bituminous C. Coal resources are 9 million tons as measured and 23 million tons as indicated and inferred. (3) Punjab Coalfields The Punjab provinces comprise the coalfields of eastern, central, and western Salt Range between Khushab, Dandot, and Khewra while Makerwal coalfield lies in Trans Indus Range (Sarghar Range). The rank of the coal is sub-bituminous A to high volatile bituminous. 1) Salt Range The Salt Range coalfield covers an area of about 260 km 2 between Khushab, Dandot, and Khewra. The entire coal-producing area is well-connected with roads and railways. The top seam varies in thickness from 0.22 m to 0.30 m while the middle seam is up to 0.60 m thick. The lower seam is up to 1 m thick and is relatively of better quality. lt is being mined in Dandot, Choa-Saiden Shah, and adjoining areas. Punjab Mineral Development Corporation and several private companies are operating the mines in the area. Reserve of the deposit is 235 million tons. Average chemical analysis is as follows: Moisture 3.2% to 10.8% Volatile Matter 21.5% to 38.8% Fixed Carbon 25.7% to 44.8% Ash 12.3% to 44.2% Sulphur 2.6% to 10.7% Heating Value 9,472 Btu/lb to 15,801 Btu/lb (5,262 kcal/kg to 8,778 kcal/kg) 2) Makerwal/Gullakhel Makerwal/Gullakhel coalfield is situated in Sarghar Range (Trans Indus Range). The coalfield extends from about 3.2 km west of Makerwal to about 13 km west of Kalabagh and covers an area of about 75 km 2 in Mianwali District. The quality of Makerwal/Gullakhel coal is better than that of Salt Range coal and is preferred by the consumers. Total reserve is 22 million tons. 2-8

36 Chapter 2 Basic Data and Information Average chemical analysis is as follows: Moisture 2.8% to 6% Volatile Matter 31.5% to 48.1% Fixed Carbon 34.9% to 44.9% Ash 6.4% to 30.8% Sulphur 2.8% to 6.3% Heating Value 10,688 Btu/lb to 14,000 Btu/lb (5,938 kcal/kg to 7,778 kcal/kg) (4) Coalfields in KP, AZAD JAMMU & KASHMIR (AJK) The coalfields of KP (Northwest Frontier Province) are not yet fully explored. The coal deposits are located in two areas, namely, Hangu and Cherat. These coal resources are estimated to be 91 million tons. The coal is classified as sub-bituminous and its heating value ranges from 9,386 Btu/lb to 14,217 Btu/lb (5,214 kcal/kg to 7,898 kcal/kg). It has low sulphur and low ash content. The coal seams in Hangu area are up to 3.5 m thick whereas the coal seams in Cherat area are generally less than 1 m in thickness. The coal quality and resources are as follows: Moisture 0.1% to 7.1% Ash 5.3% to 43.3% Volatile Matter 14.0% to 33.4% Fixed Carbon 21.8% to 76.9% Sulphur 1.1% to 9.5% Heating Value 9,386 Btu/lb to 14,217 Btu/lb (5,214 kcal/kg to 7,898 kcal/kg) Coal Resources Million tons Measured 2 Indicated 5 Inferred 84 Total 91 The AJK coalfield is located near Katli about 80 km southeast of Islamabad. One or two coal seams occur in the steeply dipping Patala Formation of Paleocene Age, Paleogene. The coal seams have an average thickness of 0.6 m. The total coal resources of AJK are estimated at 9 million tons. The coal is classified as sub-bituminous. The quality and resources are as follows: Moisture 0.2% to 6.0% Ash 3.3% to 50.0% Volatile Matter 5.1% to 32.0% Fixed Carbon 26.3% to 69.5% Sulphur 0.3% to 4.8% Heating Value 7,336 Btu/lb to 12,338 Btu/lb (4,075 kcal/kg to 6,854 kcal/kg) Coal Resources Million tons Measured 1 Indicated 1 Inferred 7 Total 9 Source: Pakistan Coal Power Generation Potential, June 2004, PPIB 2-9

37 Data Collection Survey on Thar Coal Field Coal Resources, Production, and Quality As of 2011, coal resources in Pakistan were reported to be as huge as 186 billion tons by GSP. Two large coalfields were discovered in Sindh Province, namely, Lakhra coalfield and Thar coalfield. Thar coalfield located near the border with India, accounts for 94% of Pakistan s total coal resources. The amounts of resources are enough for coal thermal power generation (Table 2.1-1). Table Pakistan Coal Resources Seam Reserves (million tons) Province /Coal Field Thickness Status Total Measured Indicated Inferred Hypothetical (m) SINDH 185,457 3,339 11,635 53, ,137 Lakhra , Developed Sonda-Thatta , , Not Developed Jherruk , Not Developed Ongar Not Developed Indus East , ,556 Not Developed Meting-Jhumpir Developed Badin Not Developed Thar Coal* ,506 2,700 9,395 50, ,705 Not Developed BALOCHISTAN Barkhan-Chamalang Developed Duki Developed Mach Abegum Developed Sor Range - Deghari Developed Pir Ismail Ziarat Developed Khost-Shahrig-Harnai Developed PUNJAB Makarwal Developed Salt Range Developed KP Hangu/Orakzai Developed Cherat/Gulla Khel Developed Azad Kashimir Kotli Developed Total Original Table 186,007 3,450 11,677 56, ,298 Source: Geological Survey of Pakistan Measured Reserves: having a high degree of geological assurance,;coal lies within a radius of 0.4 km from a point of coal measurement. Indicated Reserves: having a moderate degree of geological assurance; coal lies within a radius of 0.4 km to 1.2 km from a point of coal measurement. Inferred Reserves: having a low degree of geological assurance; coal lies within a radius of 1.2 km to 4.8 km from a point of coal measurement. Hypothetical Resources: undiscovered coal resources and are generally extension of inferred reserves in which coal lies beyond 4.8 km from a point of coal measurement. Coal production in Pakistan is either sub-bituminous or lignite, which is distributed widely over the country. Pakistan coal production reached 4.87 million tons in fiscal year and is stable in the 3.5 million-ton level recently. According to GoP, about 85% 89% (fiscal year 2-10

38 Chapter 2 Basic Data and Information ) of the total production were from small- and medium-sized private businesses. Please refer to Table and Figure for the coal production per coalfield. Table Coal Production by Coalfield Province/Field ACGR BALOCHISTAN: Sor Range 122, , , , , , % Degari 47,257 48,229 43,175 41,632 36,419 22, % Sharigh 265, , , , , , % Sinjidi 121, , , , ,020 73, % Mach 307, , , , , , % Harnai-Khost- Nasaka-Zardalu 169, ,783 93, , , , % Duki 531, , , , , , % Pir Ismail Ziarat 366, , , , , , % Abegum 27,380 14,928 11,697 17,623 6,623 28, % Barkhan/Chamalong 48, , , , ,178 Sub-Total 1,958,915 1,831,289 2,268,623 2,057,309 1,503,013 1,342, % PUNJAB: Makerwal/Salt Range 573, , , , , , % Sub-Total 573, , , , , , % SINDH: Lakhra * 981,250 1,038, ,860 1,189,211 1,097,348 Jhimpir * 18,652 19,936 14,666 10,820 3,152 Sub-Total 2,010, ,902 1,058, ,526 1,200,031 1,100, % KPK/FATA. Makerwal/Gulakhel/ 328, , ,969 52,969 56,424 85, % Kohat, FATA 215, , ,721 Sub-Total 328, , , , , , % Total:Tonnes 4,871,159 3,642,863 4,123,907 3,738,122 3,480,674 3,450, % TOE 2,179,357 1,629,817 1,845,036 1,672,436 1,557,254 1,543,571 Annual growth rate 6.20% % 13.21% -9.35% -6.89% -0.88% Source: Pakistan Energy Yearbook 2011 Source: Pakistan Energy Yearbook 2011 Figure Coal Production by Coalfield 2-11

39 Data Collection Survey on Thar Coal Field For fiscal year , 54.3% of consumption for domestic and imported coal was from cement industry, 38.9% from brick factories, 5.6% from iron making (all imported), and only 1.2% from the power industry. Sindh government has intended to develop a large-scale mine in Thar coalfield to supply coal for power generation with the help of private enterprises, including those from overseas under a legally and financially-assisted project. Please refer to Table and Figure Table Coal Consumption in Pakistan Unit: Tons TOE Sector ACGR , Domestic ,221,825 3,277,472 3,760,707 3,274,789 3,005,192 3,003, % Brick-Kiln Industry* 1,888,845 1,466,341 1,682,540 1,465,141 1,344,523 1,343,812 2,778,379 4,140,986 5,720,972 3,801,751 4,577,007 4,187, % Cement / Other Industry** 1,722,646 2,682,255 3,721,727 2,427,497 2,937,538 2,681, , , ,968 1,200, , , % Pak Steel*** 371, , , , , , , , , , ,482 96, % Power (WAPDA) 66,812 73,551 72,568 50,341 56,141 43,169 Total: Tonnes 7,713,988 7,894,058 10,110,847 8,389,873 8,138,503 7,717, % TOE 4,049,654 4,426,678 5,783,844 4,732,823 4,621,639 4,350,868 Annual growth rate -2.28% 2.33% 28.08% 17.02% -3.00% -5.18% Note: Sectiral consumption data of coal is mostly not available, except for power sector and has, threrfor, been estated. *: Estimated by deducing other uses of indigenous coal from the total production. **: Include indigenous as well as imported coal. ***.Imported coal/coke used as coke in Pak Steel Source: Cement Factories, DG(Minerals), FBS, Pak Steel,PMDC, WAPDA Source: Pakistan Energy Yearbook ,000,000 10,000,000 Brick-Kiln Industry* Cement / Other Industry** Pak Steel*** Power (WAPDA) Total 8,000,000 6,000,000 4,000,000 2,000, Note: Sectiral consumption data of coal is mostly not available, except for power sector and has, threrfor, been estated. *: Estimated by deducing other uses of indigenous coal from the total production. **: Include indigenous as well as imported coal. ***.Imported coal/coke used as coke in Pak Steel Source: Pakistan Energy Yearbook 2011 Figure Coal Consumption 2-12

40 Chapter 2 Basic Data and Information Imported coals are used mainly at steel mills and cement factories in Pakistan, and not in power stations. Please refer to Table Heating Value is estimated at 6,580 Kcal/kg. Table Import of Coal in Pakistan Unit Tons 2,842,829 4,251,195 5,986,940 4,651,751 4,657,829 4,267,058 TOE 1,870,297 2,796,861 3,938,808 3,060,387 3,064,386 2,807,297 Import value (Million Rs.) 9,248 15,720 36,210 47,321 34,937 44,832 Annual growth rate of imports % 49.54% 40.83% % 0.13% -8.39% Source: Pakistan Energy Yearbook 2012 The quality of Pakistan coal is based on many different analysis data by reports. Generally speaking, Balochistan coals have higher heating value, lower total moisture and higher total sulphur content than Sindh coals. Thar coal shows lower total sulphur content than Lakhra coal. This quality means that it is a suitable fuel for thermal generation. Badin coalfield will be newly explored; thus, quality data will be changed in the future. Please refer to Table Table Coal Quality of Coalfields in Pakistan Province / Coal Field Moisture Coal Quality Proximate Analysis (in percent) Volatile Matter Fixed Carbon Ash Total Sulphur Rank ASTM Classification Heating Value (mmmf) Btu/lb Heating Value (mmmf) Kcal/kg Average Annual Production (tonnes) SINDH Lakhra LigB to SubC 5,503-9,158 3,057-5,088 1,112,406 Sonda-Thatta SubC to hvbb 8,878-13,555 4,932-7,531 - Jherruk SubC to hvcb 8,800-12,846 4,889-7,137 - Ongar LigB to SubA 5,219-11,172 2,899-6,207 - Indus East LigA to SubC 7,782-8,660 4,323-4,811 - Meting-Jhumpir LigA to SubC 7,734-8,612 4,297-4,784 - Badin* ,740-11,100 3,744-6,167 - Thar Coal LigB to SubA 6,244-11,045 3,469-6,136 - BALOCHISTAN Barkhan- Chamalang hvcb to hvab 12,500-14,357 6,944-7,976 NA Duki SubB to hvab 10,131-14,164 5,628-7, ,518 Mach Abegum SubA to hvcb 11,110-12,937 6,172-7, ,004 Sor Range - Deghari SubA to hvbb 11,245-13,900 6,247-7, ,564 Pir Ismail Ziarat SubA to hvcb 10,786-11,996 5,992-6, ,108 Khost-Shahrig- Harnai SubB to hvab 9,637-15,499 5,354-8, ,784 PUNJAB Makarwal SubA to hvab 10,688-14,029 5,938-7,794 47,928 Salt Range SubC to hvab 9,471-15,801 5,262-8, ,964 NWFP Hangu/Orakzai SubA to hvab 10,500-14,149 5,833-7,861 77,000 Cherat/Gulla Khel SubC to hvab 9,388-14,171 5,216-7,873 36,006 Azad Kashimir Kotli LigA to hvcb 7,336-12,338 4,076-6,854. hvab =high volatile A bituminous coal ASTM =American Society For Testing and Materials hvbb =high volatile B bituminous coal To convert Btu to Kcal/Kg multiply by hvcb =high volatile C bituminous coal To convert Kcal /Kg to Btu/lb multiply by Source: Geological Survey of Pakistan (June 30, 2011), Badin*: Sindh Coal & Energy Department, GoS

41 Data Collection Survey on Thar Coal Field Laws or Regulations Related to Coal Development In Pakistan, coal development works are under the discretion of the provincial governments. Therefore, the laws and regulations related to coal development are established by each province. Table Broad Terms for Mineral Titles, Sindh Province Category Size Validity Renewals Record & Report Remarks Period (Years) Reconnaissance Not more Not Within 60 days after the end of the period of License than 100 exceeding license km 2 12 months Exploration Not more Not Quarterly report within 15 days after the end License than 1,000 exceeding of each quarter. km 2 3 years 2 A summary report within 60 days after the end of the period of such exploration license Mineral Deposit 300 km 2 Not Within 30 days after the end of the period of To carry out the Retention License exceeding licence (a report containing an evaluation of proposal for future 2 years the prospects and economical viability of mining operations 1 future mining operations in the retention Mining proposals area) are made in Within 60 days after the end of the period (an writing to the application for the renewal of the mineral of licensing authority deposit retention license or a mining lease) Mining Lease Not exceeding 250 km 2 Not exceeding 30 years Source: Sindh Mining Concession Rule, 2002 Remarks 1: Within 30 days, renewal of mining lease should be made accordingly. 2: Work is carried out within a particular time period in accordance with the scheduled program as may be specified in the license. 3: Exploration shall be valid for such period not exceeding 2 years as may be specified in the license and for additional period if any renewal thereof. 4: After mine leasing, the holder shall commence mining operations within 6 months in accordance with the approval plan. 2-14

42 Chapter 2 Basic Data and Information Table Application Fees (Sindh Mining Concession Rules, 2002) Title/Concession Rupees Equiv. US$ Equiv. Yen Reconnaissance License 15, ,295 Exploration License 25, ,492 - First Renewal 50, ,984 -Second Renewal 50, ,984 - Amendment 10, ,197 Mineral Deposit Retention License 100,000 1, ,967 -Renewal 100,000 1, ,967 -Amendment 20, ,393 Mining Lease 100,000 1, ,967 -Renewal 100,000 1, ,967 -Amendment 20, ,393 Source: Sindh Mining Concession Rule, 2002 Note: Exchange rate US$=Rp 95.6, Yen=Rp 1.22(Oct 12, 2012) Table Annual Rental Fee Period Rental Fee (per/km 2 ) Category (Years) Term of License Rupees Equiv. US$ Equiv. Yen Reconnaissance License Year , ,197 Exploration License Year , ,295 -First Renewal Year 1 1, ,230 Year 2 2, ,639 Year 3 2, ,049 -Second Renewal Year 1 4, ,279 Year 2 5, ,098 Year 3 6, ,918 Mineral Deposit Retention License Year , ,197 - Renewal Year 1 6, ,918 Mining Lease Term of Ease 10, ,197 - Renewal Renewal Period 6, ,918 Source: Sindh Mining Concession Rule, 2002 Note: Exchange rate US$=Rp 95.6, Yen=Rp 1.22(Oct 12, 2012) 2-15

43 Data Collection Survey on Thar Coal Field 2.2 Thar Coalfield Exploration History The first indication of the presence of coal beneath the sands of the Thar Desert was reported while drilling water wells by the British Overseas Development Agency (ODA) in The coalfield, with a resource potential of billion tons of coal, covers an area of 9000 km 2 in the Tharparker District based on the GSP and USAID exploration drilling works. Studies made so far on the development of Thar coal such as those by J.T. Boyd in 1994, RWE of Germany in 2002, Shenhua of China in 2004 elucidated that the Thar coal deposit could be operated through open cut mining 9. Global Mineral Company of China signed an MoU for Block I Coal Development and Power Generation with the Government of Sindh on September 19, The Engro Group and the Government of Sindh established the joint venture company, Sindh-Engro Coal Mining Company (SECMC) for developing Block II. The final bankable feasibility study was completed on August 31, For Block III, Cougar Energy (UK) is processing the desktop study. The Pakistani government is going to carry out the Underground Coal Gasification Project in Block V. For Block IV, Oracle coalfields PLC (UK) Source: Thar Block II Coal Mining Project, BFS by SECMC 2010 Figure Location Map of Thar Coalfield, Sindh, Pakistan is in the process of geotechnical drilling and ESIA completion. Other blocks, Block VII to Block XII, are available for investment Geological Setting The Thar coalfield area is covered by sand dune that extends to an average depth of over 80 m and rests upon a structural platform in the eastern part of the desert. This platform is 9 GSP paper 2-16

44 Chapter 2 Basic Data and Information underlain by relatively shallow granite basement rock. It shows that the granite basement complex dips down abruptly beneath the western part of the Thar Desert and is highly faulted there. The generalized stratigraphic sequence in the Thar coalfield area is shown in Figure It comprises of basement complex, coal-bearing Bara formation of Paleocene to early Eocene Age, alluvial deposits of sub-recent age, and sand dune of recent age. There are not any coal outcrops in the Thar coalfield area due to thick sand dune and sub-recent alluvial sedimentary rocks. All the geological information have been obtained through drilling. Coal is found in the Bara formation of Paleocene - Eocene Age and is present just below the sub-recent deposits. A number of coal seams are present in the area (Figure 2.2-3). The coal beds of variable thickness ranging from 0.20 m to m are developed. The maximum number of coal seams found in some of the drill holes is 20. The cumulative thickness of the coal beds ranges from 0.2 m to 36 m (IEA 2004). A large coalfield, having a resource potential of about 175 billion tons, has been discovered at Thar in the eastern part of Sindh Province about 400 km southeast of Karachi. The coalfield extends over 9100 km 2. Out of this area, 12 blocks are developed (Block I to XII) in 1432 km 2 with total coal reserves of billion tons. The first four blocks were developed by GSP in association with USGS. Eight blocks were developed by China North East Coalfield Geological Survey Bureau and six blocks through Deep Rock Drilling Pvt Ltd. Pakistan. The main coal seam thickness ranges from 12 m to 21 m at an average depth of 170 m with the upper 50 m being loose sand (sand dune). The quality of coal has been examined by chemical analyses of 2000 samples or more. Based on the analyses, the rank of the coal was defined as ranging from lignite B to lignite A. The weighted averages of chemical contents measured from the coal samples from the entire Thar coalfield are as follows: Moisture (AR) 46.77%; Volatile Matter (AR) 23.42%; Fixed Carbon (AR) 16.66%; Ash (AR) 6.24%; Sulphur (AR) 1.16%; Heating Value 5,774 Btu/lb (3,208 kcal/kg); Note: AR: as received base Dry: dry based 2-17

45 Data Collection Survey on Thar Coal Field Formation Age Thickness Lithology Sand Dune Recent 14 m to 93 m Sand, silt and clay Unconformity Alluvial Deposits Sub-recent 11 m to 209 m (variable) Sandstone, siltstone Unconformity Bara Formation Paleocene to Early Eocene +52 m (variable) Claystone, shale, sandstone, coal, carbonaceous claystone Unconformity Basement Complex Pre-Cambrian Granite and quartz diorite. Source: Geological Survey of Pakistan Figure Stratigraphic Sequence in the Thar Coalfield The color of the coal is generally brown to brownish black. Thar coal is slightly banned and cleared. Resins of different colors ranging from greenish yellow to dark brown are present. Pyrite is present as fine grains. Some numbers of coal seams are present. Detailed development status of Thar coalfield is discussed in Chapter

46 Chapter 2 Basic Data and Information A-B: Cross Section Line Base Map: Coal Resources of Four Blocks in Thar Coalfield, Sindh, Pakistan, Geological Survey of Pakistan Figure Blocks, Cumulative Thickness, and Cross Section Line in Thar Coal Blocks 2-19

47 Data Collection Survey on Thar Coal Field Source: Geological Survey of Pakistan Figure Generalized Cross Section through Block I, IV,II and III Thar Coal Blocks Source: Prepared by JICA Survey Team referring to U.S. Department of Interior/U.S. Geological Survey Open-File Report Figure Representative Borehole Sections in Thar Coalfield 2-20

48 Chapter 2 Basic Data and Information Source: Prepared by JICA Survey Team Figure Location of Borehole Sections in Thar Coalfield 2-21

49 Data Collection Survey on Thar Coal Field Photo Mining Area of Block II Photo Mining Area of Block II Photo Rescue Center in Thar Photo Underground Gasification in Block V First Gas-blow up Hole Photo Underground Gasification Gas and Air Piping Photo Underground Gasification Drilling the Hole 2-22

50 Chapter 2 Basic Data and Information Meteorology and Hydrology (1) Meteorology Thar Desert has a semi-arid climate with a short monsoon period. Rainfall is often concentrated in a period of two or three days. Drought year recurs every third year. In general, annual rainfall is 100 mm to 200 mm. The minimum annual rainfall is 24.6 mm and the maximum is 1500 mm recorded in 1991 and 2011, respectively. Average monthly rainfall and temperature in 30 years between 1979 and 2008 are shown in Figure In summer, it is extremely hot during the day; on the other hand, nights are bearable. The characteristics of rainfall are as follows: Rainfall is concentrated during monsoon from July through September; Individual monthly rainfalls can be as high as 500 mm while daily rainfalls can show value up to around 100 mm. The characteristics of temperature are as follows: The hottest month is May and June. The coldest month is January. Daily maximum temperatures may be as high as 50 C in May and June; The average yearly temperature is around 26 C. Climate in Thar Desert ( ) Rainfall (mm) Rainfall Temperature Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Temperature( C) Source: Sindh Engro Coal Mining Company (2010) Figure Average Monthly Rainfall and Temperature (2) Hydrology 1) Surface Water The main water sources in Sindh Province are surface run-off irrigation channels and 2-23

51 Data Collection Survey on Thar Coal Field groundwater. However, surface water is not present in Thar Desert. The nearest rivers and channels, located in Indus River valley, to Thar Desert run about 120 km west. The absence of river channels in the area makes it difficult to discharge any pumped groundwater or surface water; therefore, a pipeline for disposal of waters is necessary. Rann of Kutch, a seasonal salt marsh located in Thar Desert, extends over Pakistan and India, and covers a huge area of about 30,000 km 2. The salt lakes and pans existing in the south border of Sindh Province are filled with rainwater during the rainy season. Heavy rainfall sometimes brings extreme floods. In mid-august 2011, heavy monsoon rains caused considerable damages to Sindh, eastern Balochistan and southern Punjab. Mithi in Thar Desert received a record rainfall of 1290 mm during the spell. An estimated 434 people died, and 5.3 million people and 1,524,773 homes suffered in these areas (The Express Tribune, 2011). Such floods often cause the death of thousands of cattle and also severely endanger the local population in Thar Desert. 2) Regional Groundwater The Thar coalfield area has at least three aquifers, i.e., Sand Dune Aquifer, Coal Seam Roof Aquifer (Sub-recent Aquifer), and Coal Seam Floor Aquifer (Footwall Aquifer). Coal Seam Floor Aquifer is the main aquifer in this region. Most of the people in Thar Village use the groundwater in Sand Dune Aquifer for their consumption both for domestic purposes and cattle. The details are presented in Chapter Hydrogeology. Although the groundwater in Sand Dune Aquifer is recharged by rainfall, the groundwater in the other two aquifers flow in from the Indian side where the sediments subcrop beneath the sand dune about 200 km to the northeast of the Thar Coalfield. Salt lakes and pans in Rann of Kutch may be connected to the groundwater. Figure shows the bird s eye view of geography and geology in the survey area with regional groundwater direction. The regional groundwater generally flows along surface slope from northeast to southwest. In Nagarparker located in the southeast boundary of Pakistan, there are two perennial springs named Anchleswar and Sardharo, and two temporary streams called Bhetiani River and Gordharo River. Adequate water flow is noted after the rain in these rivers (Environmental Management Consultants, 2012). 2-24

52 Chapter 2 Basic Data and Information Source: JICA Survey Team (Base Map: Geological Survey of Pakistan and NASA) Figure Bird s Eye View of Geography and Geology in the Study Area with Regional Groundwater Direction 2-25

53 Data Collection Survey on Thar Coal Field Coal Recourses and Reserves Coal resources and reserves for block I to block XII are summarized in Table Block Allocated Investors Exploring Agency Table Exploration Situation and Coal Resources Classification System Period Total Drill Holes Area (km 2 ) Resources (million tonnes) Measured Indicated Inferred Total < 0.4km km km GSP GESCR , , ,566 I Sino Sindh Rheinbraun Resources Engineering USGS ,003 (Germany) II GSP GESCR ,584 Sindh- Engro USGS , ,351 Engro Engro JORC-AusIMM ,240 III-A Couger GSP GESCR , ,008 III-B GSP GESCR ,453 IV GSP USGS , ,571 V UCG Project CNCGB GESCR ,394 VI Oracle CNCGB GESCR ,655 Coalfields Oracle JORC ,423 VII DRD USGS , ,175 VIII DRD USGS , ,035 IX DRD USGS , ,862 X DRD JORC , ,870 USGS , , XI DRD JORC , USGS , , XII DRD JORC , , Total Source: TCEB Quality Coal qualities for Blocks I to XII are summarized in Table Block Area (km 2 ) Total Reserves (billion ton) Table Coal Qualities for Blocks I to XII Moisture (%) Ash (%) Vol. Matter (%) Sulphur (%) Heating Value (As Received) (Btu/lb) Fixed Carbon (%) I , II , III-A , III-B , IV , V , VI , VII , VIII , IX , X , XI , XII , Source: Mines & Minerals Development Department, Government of Sindh 2-26

54 Chapter 2 Basic Data and Information 2.3 Other Coalfields in Sindh Lakhra Coalfield The Lakhra Coalfield, located in Dadu District, Sindh, lies 16 km to the west of Khanot Railway Station of the Pakistan Railways, and covers an area of approximately 200 km 2. The location is well connected to Hyderabad and Karachi through roads and railways. Mining in the area is done by underground method. Three coal seams are established in the field, however, generally only the middle seam, known as Lailian Seam, possesses the necessary persistence and thickness for consideration in large-scale mining (Figure 2.3-1). Lakhra coalfield is being operated by 20 to 25 private and two public companies, namely, Pakistan Mineral Development Corporation (PMDC) and Lakhra Coal Development Company (LCDC), which is the joint venture of PMDC, Sindh government, and WAPDA. The largest coal mine company in the coalfield is LCDC which was set up to supply the coal to Lakhra Power Generation Company. The coals are produced from about 90 underground pits, and sold at a fixed price of approximately Rs.3300 per ton, while other coal companies sell their coal at market price. Private coal companies employ a lot of labourers to increase their production with high wage when the price of coal goes up, normally during the period of working the brick kilns. Labourers can earn more at other local private mines, and many men leave at short notice from the public sector s mines (IEA 2004). Source: A.H. Kazmi and R.A. Sidiqi Significance of the Coal Resources of Pakistan Figure Generalized Cross Section of Lakhra Coalfield 2-27

55 Data Collection Survey on Thar Coal Field After the first discovery of coal in 1853, as aforesaid, many geological investigations had been done in the Lakhra area by both national and international organizations. A large-scale exploration of coal for power generation began in the early 1960s when GSP and USGS performed a systematic geological investigation of the area. The West Pakistan Industrial Development Corporation (WPIDC) s tests found Lakhra coal unsuitable for hard coke production, but suitable for power generation. In 1996, WPIDC engaged a Polish firm to undertake a mining and power generation feasibility study utilizing the Lakhra coal. In 1978, JICA carried out additional technical and financial and economical feasibility studies. In 1981, JICA concluded that a 300-MW power generation plant can be technically feasible; however, the financially estimated coal production cost is very high. Then, GoP asked USAID to review all studies on Lakhra and to assess the establishment of the coal thermal power station. USAID completed the feasibility study in 1986, in which they concluded that utilizing Lakhra coal for two units of 250 MW power plants is technically, socially and environmentally feasible (PMDC Coal Mines Internship Report Jan 2012). However, GoP finally selected the fluidized bed combustion (FBC, 50 MW x 3) from Chinese Dongfang Electric Corporation (DEC) with supplier s credit. These three FBCs were completed in Lakhra coal is associated with the Bara Formation of late Paleocene Age. The stratigraphic sequence is predominantly marine sediment, but also includes lacustrine, estuarine, deltaic and lagoonal deposits containing plant fossils and carbonaceous beds at several horizons. The beds have been affected by orogenic movements of different intensities during different times, resulting in the warping, faulting and dislocation of coal seams. Table Factors on Each Seam in Lakhra Coalfield Dhanwari Seam Lalian Seam Katih Seam Coal Seam Depth 43 m 90 m 27 m 123 m Area or Distance km along the long km Confirmed crest of Lakhra Anticline 6.12 km 2 Thickness max 2.94 m 1.0m 3.80m max 1.4 m Ash 14.5% 24.5% 10.8% 27.4% 22.1% VM 39.8% 47.6% 37.3% 45.1% 43.5% FC 32.2% 40.0% 32.3% 38.3% 34.6% TS 6.9% 8.5% 2.3% 8.3% 9.8% Heating Value 10,910 Btu/lb (6,060 kcal/kg) Source: PMDC Report The coal beds at Lakhra have been gently folded by an anticline. Nearly all the coal occurs at depth of 50 m to 450 m from surface in gently dipping strata. A large number of coal seams have been encountered in boreholes, only three of them are significant and have been named as Dhanwari, Lailian, and Kath. The Lakhra coal is dull black and contains amber resin flakes. 2-28

56 Chapter 2 Basic Data and Information It tends to crumble on larger exposures and is often susceptible to spontaneous combustion. The Lakhra coal ranges from lignite A to sub-bituminous C. The gross heating value ranges from 2,570 kcal/kg to 4,260 kcal/kg. Mining in Lakhra area is done manually underground. The extracted coals are put into small bags for lifting to the ground level by motor-driven winch, which is also equipped with a small-scale ventilation fan. The mine of LCDC consists of one vertical shaft and 6 or 7 inclined shafts normally. One mining team, consisting of 12 labourers, produces 24 tons per day. Figure Generalized Stratigraphy of Workable coal seams In 2007, the LCDC had 44 mines which were fully developed and had production capability of tons per day per mine. The additional 39 mines were under development (PakMintPet 2007). Based essentially on the results of the initial exploratory work done by the GSP, more detailed exploration has been subsequently undertaken by PMDC, JICA, WAPDA, and USAID. The total reserves of the deposit have been estimated to be 1,328 million tons of which 244 million tons are measured, 629 million tons are indicated, and 455 million tons are inferred. Average annual production of coal from Lakhra is over one million tons. Most of this production should be used in the WAPDA power plant at Khanote (Lakhra Power Plant), Sindh and in the brick kiln industry. Exploration and evaluation of North Lakhra coalfield have been sponsored with estimated cost of Rs million. The study is at the exploration stage. (Sindh Coal Authority, December 12, 2003) 2-29

57 Data Collection Survey on Thar Coal Field Inclined shaft Vertical shaft Photo View of Lakhra Coalfield Photo Vertical Shaft at Lakhra Coalfield Photo Winch for Coal Lifting up through Vertical Photo Entrance of Inclined Shaft Shaft Photo Inside of Inclined Shaft (Incline of 35 degrees) Photo Small Ventilation Fan for Underground Mining 2-30

58 Chapter 2 Basic Data and Information Sonda - Jherruk Coalfield Sonda - Jherruk coalfield was discovered by GSP/USGS in From 1986 to 1989, GSP drilled 80 holes in the area, which covers an area of 1500 km 2. The drilling data indicates that the accumulated coal bed is about 6.2 m thick, the maximum thickness of one coal seam is 3.3 m in Jherruck, and the overburden is about 120 m at the mineable seam. The total coal reserves are estimated at 7,773 million tons, of which 147 million tons are considered as mineable (Pakistan Coal Power Generation Potential by PPIB June 2004). Sonda - Jherruk coalfield consists of four areas, namely: Sonda/Thatta, Jherruck, Ongar, and Indus East. Table shows elements of each area in Sonda - Jherruck. The rank of coal is lignite A. Block Table Elements of Each Area in Sonda - Jherruck Sonda- Thatta Jherruck Ongar Indus East Total Area (km 2 ) ,500 Boreholes Coal Seam Thickness (average m) Coal Resources (million tons) measured Total 3,700 1, ,777 7,612 Coal Rank liga~subc liga~subc liga~subc liga~subc Moisture (%) Ash (%) Volatile Matter (%) Fixed Carbon (%) Total Sulphur (%) Heating Value (kcal/kg) 3,866 4,421 3,659 3,889 Source: Sindh Coal Authority [Coalfields of Sindh] The coal seams in the upper zone, above the Sonda Seam in the geological columnar, are termed as "Dhaduri Seams" whereas the name of "Jherruck Seams" is assigned to the coal seams falling in the lower coal below the Sonda Seam (Ahmad and others, 1986). Three other seams encountered only in drilling hole DH-20 are stratigraphically just above the Sonda coal seam, in the middle coal zone and are named as Inayatabad Seams. The drilling data indicates that in the Sonda coalfield, pinching and swelling of the lenticular coal beds are pronounced which make the correlation of seams difficult. The beds are almost horizontal to two degrees dipping towards the west. The beds plunge gently towards the south. The main 2-31

59 Data Collection Survey on Thar Coal Field Sonda coal seam is considered to have a reasonable consistency in its extension, although it could be discontinuous or change to carbonaceous shale, and wash out between the widely spaced drill holes (Sindh Coal and Energy Department, GOS 2010). The Sonda-Jherruk Coal Mine and Power Plant Project is currently being undertaken by China National Machinery Import and Export Cooperation. The project consists of mine development with annual production of 1.8 million tons and coal thermal power generation with capacity of 3 x 135 MW. Total investment is US$760 million, in which mining and power plant costs are allocated US$290 million and US$470 million, respectively. The development schedule was not shown in the presentation pamphlet in November Photo Sonda Village Photo Jherruk Area (China Team s Exploration Area) Badin Coalfield A new coalfield is discovered at Badin located between Sonda-Jherruck and Thar coalfields. The GSP and USGS carried out exploration works at Badin coalfield by drilling. First information on Badin coal shows that the coal seam thicknesses are 0.2 m and 0.35 m at depths of m and m, respectively. The Geological Survey of Pakistan reported coal seam thickness of 0.55 m to 3.1 m and coal resources of 850 million tons as of June 30, According to the Nation (a newspaper) dated June 2012, the coal resources of Badin are 1,785 million tons more than those of Lakhra Coalfield. The Badin coal belongs to Paleocene Age confined to Bara Formation of the Ranikot Group (Hunting Survey, 1961). Badin area is a flat area covered with alluvial deposits, completely devoid of outcrops. The stratigraphic sequence as per Geological Survey of Pakistan shows silt, clay and sand from 50 m to112 m with alluvium of sandstone, siltstone and mottled claystone. Bara Formation is composed of sandstone, carbonaceous clay stone, and coal. Coal is brackish, blight and dull in appearance, with occasional resin globules at present. It is 2-32

60 Chapter 2 Basic Data and Information compactly massive to cleaved coal. The coal is separated into thin seams. The maximum number of seams encountered is six. The average thickness of the coal seams ranges from 0.35 m to 2.98 m. The cumulative coal thickness of the coal seams ranges from 0.45 m to 7.17 m (Information Memorandum on Badin coalfields, District Badin, Province Sindh, Pakistan Coal and Energy Development Department, Government of Sindh). Table Quality of Badin Coal Moisture Volatile Matter Fixed Carbon Ash Sulphur Heating Value Heating Value % % % % % (Btu/lb) (kcal/kg) 15.4 to to to to to 7.4 6,740 to 11,100 3,744 to 6,167 Coal Rank Lignite A to Sub-bituminous Source: Sindh Coal & Energy Department, GoS Lakhra Thermal Power Plant (1) The Outline of the Lakhra Thermal Power Station The Lakhra power station at Khanote was constructed by the EPC contractor of Dongfang Electric Corporation in China. The type of boiler is FBC (Fluidized Bed Combustion) Boiler licensed by Foster Wheeler (USA). Unit No.1 to No.3 started operations in 1995 to The Lakhra power station (GENCO IV) is the one of subsidiary of The Pakistan Electric Power Company Private Limited (PEPCO) named the Lakhra Power Generation Company Limited (LPGCL). The 800t/day coal is supplied from The Lakhra Coal Development Company Ltd. (LCDC) by truck. The distance between the mine and the power station is about 20km.The water for the station is supplied from the Indus River, where the intake of the water is constructed, through the 2.5km underground pipe line. The located relation of the mine and the power station is illustrated in the Figure And the main characteristics of Lakhra Power Station is shown in Table

61 Data Collection Survey on Thar Coal Field Indus Highway Water Intake Indus River Transport by Truck 20t/car 40car=800t/day P Lakhra Coal Mine Power Station 20km 0 2.5km Figure Located Relation of Lakhra Coal Mine and Power Station Table2.3-4 Main Characteristics of Lakhra Power Station Item Unit No. 1 Unit No. 2 Unit No. 3 Start of Operations Jun.1995 Oct.1995 Jan.1996 Boiler Manufacturer Dongfang Boiler Boiler Capacity(MCR) 220 t/hr Steam Pressure 9.8MPa Steam Temperature 514 C Turbine / Generator Manufacturer Dongfang Turbine/Dongfang Electric Machinery Turbine Capacity 50 MW Coal Ash in coal 19.52%(design) Moisture in coal 32%(design) Sulphur in coal 5.2%(design) Water Supply Source and Volume 2.55m 3 /sec (9 cusec) (from Indus river) Condenser cooling Wet type cooling tower system Source : Lakhra Power Station (2) Operational Condition The low availability and the low performance for all units have continued since commissioning due to many technical problems. The comprehensive rehabilitation work for the boiler No.1 of the plants started in 2006, and re-commissioned on March Then only the unit can be operate on 35MW continuously. On the other hand, other 2 unit cannot operate anymore. The key operational functions are shown in Table

62 Chapter 2 Basic Data and Information Table Operation Data Unit Gross Generation GWh Send Output GWh Auxiliary Consumption % Maximum Load MW Load factor % Operating time hrs Total Number of Shutdown Time Forced outage factor % Availability factor % Thermal efficiency(gross) % Source : Lakhra Power Station (3) Analysis on the low availability and accelerated deterioration of facilities The operation of plants was started in1996, however the plants was old design concept such as manual control system (no automatic control system) and usage of old type components (Ref. Photo 2.3-9) compared with other plants installed in the period. In addition, the boilers were ugly deteriorated, two units have not been able to operate any more in these five years. Only one unit can be operated with comprehensive rehabilitation. The LPGCL makes the comprehensive refurbishment plan again, which is estimated at about Rs.1.5 b for 3 Units. The chief executive officer of the power station explained that the deterioration has been caused by the higher sulphur and ash contents, that much exceed the design value of the coal. Addition to the above, the JST assumes that the next two issues cause the rapid deterioration form the technical point of view. 1) The ash erosion problem rerated the low quality of limestone The relation between coal quantity and limestone is shown in Figure The rated design values of coal and limestone consumptions are 51.6t/h and 26.5t/h respectively (blue line). Where the sulphur content is 5.0% of the coal, necessary volume of pure limestone (100%) calculated as only 8.4t/h theoretically (green line). If sulphur content in coal is 7%, 37.1 t/h of limestone (red line) is necessary. Counting backward, the purity of the limestone is calculated at 35%, the remaining 65% is assumed metal oxide mainly such as silica and alumina. It was found that the evaporation tubes at the lower part of furnace are covered by protecting plates. The area is the same part of fluidizing burning zone of coal and limestone. The protecting plate (Ref. Photo ), may reduce the volume of steam evaporation eventually reduce the generation output. In consequence, maximum output of the unit can generate 35MW only despite rated output 50MW. 2-35

63 Data Collection Survey on Thar Coal Field The remaining material volume was calculated from molecular weight percentage in limestone. The remaining material volume is 65% of 26.5t/h (rated volume of limestone), 17.2t/h. But then the coal ash weight is 20% of 51.6t/h (rated volume of coal), 10.3t/h, if ash percentage increase from 20% to 30%, total ash weight increase 5t/h only. Consequently, the low quality of limestone is assumed to affect the erosion of boiler tubes and ash handling system because metal oxide such as silica and alumina is very hard material. Volume of Limestone t/h t/h 38.7t/h 51.6t/h 25MW(50%) 37.5MW(75%) 50MW(100%) limestone(s 5%) limestone(s 7%) pure limestone supply limit (design) Volume of Coal Source: JICA Survey Team Figure: Relation of Coal and Limestone Supply 2) The management of de-sulphurization rate and high sulphur in coal As stated above, the purity of the limestone may be very low. Injected volume of limestone for de-sulphurization shall be controlled in accordance with the sulphur content or purity of limestone. However, since neither automatic control system nor SOx measurement system are equipped, feeding volume of limestone is controlled manually in proportion of the coal consumption. The lack of calcium in the limestone may induce the outbreak of the sulphurous acid gas in the exhaust gas which causes various erosions and corrosions of equipment, namely early deterioration of the boiler and the bag filter system. Also the coal with high contents of sulphur, mixing with high moisture, cause deterioration on coal handling system such as coal feeder, coal conveyer and coal crushers. Strict management of sulphurous acid gas concentration introducing automatic control system is recommended. Furthermore, utilizing the anti-sulphate material and the anti-erosion material is recommended. 2-36

64 Chapter 2 Basic Data and Information Source: JICA Survey Team Source: JICA Survey Team Photo Obsolete Local Distribution Box Photo Protect Plate in Furnace (4) Lesson Learned from the Lakhra Power Station The points connecting to the difficulty of handling coal contained high sulphur and high moisture, were observed, which are mentioned below. The erosion by the ash of the boiler area occurred by mainly by ash form low purity of limestone not so much by coal ash. Therefore using high purity limestone for de-sulfurization agent is important. The SOx concentration in the exhaust gas should be controlled strictly by feeding back the injection quantity of limestone. In addition, it is suggested that the exhaust gas temperature should be kept higher than the dew point of sulphic acid, 140 C at least, at the point of stack inlet, and the in-furnace pressure should be kept negative pressure to prevent deterioration of the facilities in boiler area by acid gas. 2-37

65 Data Collection Survey on Thar Coal Field 2.4 Power Development Plan Basic Policy of Power Development Plan As described in Paragraph Present Situation of Power Supply and Demand, the total installed capacity of Pakistan was around 21,000 MW in However, rapid growth and inadequate generation created a gap between supply and demand resulting in significant load shedding in all countries. In order to address this gap, the National Transmission and Despatch Company (NTDC) of Pakistan identified the need to develop a National Power System Expansion Plan (NPSEP). The objective is to provide a plan for the development of hydroelectric, thermal, thermal nuclear, and renewable energy resources to meet the expected load up to the year The plan was prepared during the period from December 1, 2010 through May 31, The NPSEP is known as the latest plan for power generation and grid expansions Long-Term Power Demand Forecast In the NPSEP, four forecasts, namely: Base Case, Base Case with DSM, Low Case and High Case, are prepared wherein the forecasted values for the selected years only are summarized in Table Table Forecasts for Selected Year Growth Rate ( ) Sales (GWh) Base Case 106, , , % Base Case with DSM 106, , , % Low Case 106, , , % High Case 106, , , % Generation (GWh) Base Case 139, , , % Base Case with DSM 139, , , % Low Case 139, , , % High Case 139, ,663 1,106, % Peak Demand (MW) Base Case 22,251 49, , % Base Case with DSM 22,251 49, , % Low Case 22,251 42, , % High Case 22,251 54, , % Source:NTDC National Power System Expansion Plan Note: DSM: Demand side management The peak demand forecast growth for High, Base, and Low cases are shown in Figure Peak demand, below 20,000 MW in , will increase to double in and exceed 100,000 MW in for the Base Case. Therefore, for developing the generation plan, the dynamic challenge of not only compensating the present gap but also catching up with the increase demand is indispensable. 2-38

66 Chapter 2 Basic Data and Information Peak Demand Forecast 200, , , , , ,000 80,000 60,000 40,000 20,000 High Case Base Case Low Case (MW) Year Source:JICA Survey Team prepared based on Table Figure Peak Demand Forecast for High, Base, and Low Cases Generation Planning The generation development plan in NPSEP is shown in Table By the year , 98,120 MW additional generations are planned to be developed in the countries. Out of this, the coal thermal generation in Thar shall share 37,422 MW, which is 38% of the required additional generation. Year Demand (MW) Gas Turbine Table Generation Expansion Plan CC Gas Turbine Steam Turbine Additional Capacity (MW) Coal Thermal in Thar * Nuclear Hydro Wind Import Annual Total , , ** 249 1, ,225 1, ,423-1, , ,018 4,363 1, , ,750 2, ,000 6, ,728 2, , , ,149 3,969 1, , ,967 3, ,435 6, ,879 2, ,089 7, ,147 1, , , , ,424 2, , , , , , , , ,015 1,379 4, , ,586 5, , , , , , ,379 5, ,756 Total 1,188 10, ,422 6,600 34,991 5,400 2,000 98,120 * Steam Turbine using Thar Coal ** Including 76 MW Jamal Din Wali R.Y. Kham, Punjam (Bagasse) and 24 MW bio waste plant and 352 MW converted from oil to coal in KESC system, GT: Gas Turbine, CCGT: Combined Cycle Gas Turbine, ST: Steam Turbine Source:NTDC National Power System Expansion Plan

67 Data Collection Survey on Thar Coal Field Figure shows the dependence ratios of generation type. Coal thermal in Thar shares 38%, hydro has 36%, CC gas turbine has 10%, nuclear has 7%, wind has 6%, import has 2%, gas turbine has 1% and steam turbine is negligible. 36% 6% 2% 1% 10% 7% 0% 38% Gas Turbine CC Gas Turbine Steam Turbine Coal Thermal in Thar Nuclear Hydro Wing Wind Import Source: Prepared by the JICA Survey Team based on the data in Table Figure Capacity Rate in Thar Coalfield on the Generation Expansion Plan The incremental plan of the generation capacities in Thar coalfield is shown in Figure By , 66 units of 600-MW (33 MW of which is self-used and the balance of 567 MW can be sent to the grid) coal thermal power plants are forecasted to be installed. In , the first five units are planned to be put into operation. Then, this will be gradually increased to 66 units. Installed Capacity (MW) (MW) Year Source: Prepared by the JICA Survey Team based on the data in Table Figure Increment of Generation Capacity in Thar 2-40

68 Chapter 2 Basic Data and Information Power Grid Expansion Plan (1) Existing Power Grid The transmission network is maintained and operated by the National Transmission and Despatch Company (NTDC). The NTDC has 12 grid stations at 500 kv and 29 grid stations at 220 kv, and 5077 km of 500 kv transmission line and 7359 km of 220 kv transmission line in Pakistan at present. The existing grid map for 500 kv and 220 kv systems is shown in Figure Source: NTDC Figure Existing Grid Map for 500 kv and 220 kv Systems 2-41

69 Data Collection Survey on Thar Coal Field (2) Expansion Plan up to In order to meet the demand forecast and development of generation capacity up to , NTDC will expand the transmission network. The expansion plan for 500 kv and 220 kv systems up to is as follows: Source: National Power System Expansion Plan Figure Expansion Plan Grid Map for 500 kv and 220 kv Systems up to

70 Chapter 2 Basic Data and Information Table Summary of Major Expansion Plan up to Power Plants Transmission Line Guddu New (CCPP) kv Guddu New CCPP M. Garh kv In/out of Guddu Multan at Guddu New (CCPP) kv In/out D.G. Khan Multan at M. Garh Haveli Bahadur Shah kv Haveli Bahadur Shah CCPP Faisalabad-West (CCPP) kv In/out of M. Garh Faisalabad-West S/C at Haveli Bahadur Shah CCPP Sahiwal (CCPP) kv In/out of Sahiwal Multan 500 kv S/C at Sahiwal (CCPP) Neelum-Jehlum - (Hydro) 500 kv Neelum-Jehlum to existing Gujranwala (Gakhar) Thar (Coal) kv Thar - Matiari Imported Coal (AES and Public Sector) Import of power from Iran Import of power from CASA CHASHNUPP-III and IV Two clusters of wind power plants at Gharo and Jhimpir Source: NTDC kv In/out of Hub-Jamshoro at AES kv AES to Matiari kv In/out of AES - Matiari at Public Sector (Imported Coal) kv In/out of Jamshoro - Moro S/C at Matiari - ± 500 kv HVDC Bipoles from Zahedan to Quetta kv Quetta Quetta Ind kv Quetta Mastung kv Quetta Loralai - ± 500 kv HVDC Bipoles from Tajikistan to Peshawar kv In/out of Tarbela Peshawar 500 kv S/C at Peshwar-2 (new 500/220 kv substation) kv In-out of Peshawar Shahibagh S/C at Peshawar kv Chashma New Bannu kv In-out of D.I. Khan Jauharbad at Chashma New kv Jhimpir T.M Khan Road kv Gharo Jhimpir 2-43

71 Data Collection Survey on Thar Coal Field (3) Expansion Plan for In this period, in order to supply power to the northern areas from the Thar power plants, the high voltage direct current (HVDC) transmission lines are planned in the domestic areas for the first time. Expansion plan for 500 kv and 220 kv systems for is as follows: Source: NTDC Figure Expansion Plan Grid Map for 500 kv and 220 kv Systems up to

72 Chapter 2 Basic Data and Information Table Summary of Major Expansion Plan for Power Plants Transmission Line Thar Coal - ± 600 kv HVDC 4000 MW Bipoles from Thar to Lahore-South with two converter stations of same capacity at both ends - ± 600 kv HVDC 4000 MW Bipoles from Thar to Faiselabad-West with two converter stations of same capacity at both ends kv from Thar to Karachi new 500/220 kv substation at KDA-33 Karot kv In-out of one circuit of Neelum-Jehlum to Gujranwala via Aliot Azad Pattan kv In-out of one circuit of Neelum-Jehlum to Gujranwala via Aliot Diamer-Basha 1 and kv Basha Chilas Bunji kv Basha - Mardan via Swat Valley kv Bunji Chilas - Three 500 kv switching stations/substations at Chilas, Aliot, and Mardan with the following arrangements: a. New 500/220 kv Mardan Substation to feed local loads b. 500/220 kv Aliot Substation to connect to Chakothi HPP at 220 kv kv In-out Neelum Jehlum - Gujranwala 500 kv D/C at Aliot Switching Station kv Aliot to Islamabad West kv Aliot to Lahore North 500 kv D/C (with a new 500/220 kv substation of Gabral-Kalam, Kalam-Asrit, Asrit-Kedam, and Madyan (Swat Valley HPPs) Shogosin, Shushgai and Golen Gol (Chitral Valley HPPs) Lahore North) kv In-out one each of Basha - Mardan New 500 kv D/C at each of Swat HPPs - 220/132 kv Chitral Substation to collect power from all HPPs at 132 kv kv Chitral Chakdara Suki Kinari kv In-out of one circuit of Chilas-Aliot Chakothi kv Chakothi Aliot Chashma Nuclear kv Chashma Ludewala Qadirabad Nuclear kv Qadirabad Nuclear Power Plant to Gujranwala (Gakkhar) Kaigah - Kaigah-Mardan New 500 kv D/C (operated as an interim arrangement until the commissioning of the 2nd stage of Basha) Source: National Power System Expansion Plan

73 Data Collection Survey on Thar Coal Field (4) Expansion Plan for In this period, since the chunks of generation plants such as thermal power at the Thar coalfield and hydropower plants in the northern areas are planned in order to meet the demand forecast, transmission network will also be expanded. Expansion plan for 500 kv and 220 kv systems for is as follows: Source: NTDC Figure Expansion Plan Grid Map for 500 kv and 220 kv Systems up to

74 Chapter 2 Basic Data and Information Table Summary of Major Expansion Plan for Power Plants Transmission Line Bhikki kv In-out Lahore-Gatti 500 kv S/C Thar Coal - Three ± 600 kv HVDC 4000 MW Bipoles from Thar to Lahore-South with six converter stations of same capacity on both ends - Two ± 600 kv HVDC 4000 MW Bipoles from Thar to Faisalabad with four converter stations of same capacity on both ends - One ± 600 kv HVDC 4000 MW Bipoles from Thar to Multan with two converter stations of same capacity on both ends - Three 500 kv D/Cs from Thar to Matiari Two 500 kv D/Cs from Matiari to Moroo 500 kv D/C from Moro to R. Y. Khan - Two 500 kv D/Cs from Thar to Karachi (Karachi-East) Bunji 2 and kv D/C from Bunji to Chilas kv D/C from Chilas to Aliot Basha kv In-out Basha-1 to Chilas Munda kv In-out Peshawar-2 (Pajjagi Rd.) Ghalanai kv Munda Mardan New (Charsaddah) Kohala kv In-out Neelum-Jehlum to Aliot Palas Valley kv Palas-Valley to Mansehra Dasu kv Dasu-Mansehra kv Dasu to Palas-Valley Lower Spatgah kv In-out one circuit of Dasu-Palas Valley PAEC Karachi kv from PAEC to Karachi-South kv from Karachi-South to Karachi-East Wind Power Cluster kv In-out one circuit of Karach East-Matiari at Jhimpir For Wind Power kv In-out Thar-Karachi-East Cluster at Gharo Thakot kv Thakot-Mansehra Pattan kv Pattan-Thakot kv Thakot-Mardan Dhudnial kv Dhudnial - Neelum Jehlum D.I. Khan (CCPP) - Connect at 220 kv substation of D.I. Khan Yulbo kv Yulbo-Bunji Tungus kv Tungus-Yulbo Chashma (Nuclear) kv Chashma-Bannu Balloki kv In-out Lahore-South to Okara (Sahiwal) Source: National Power System Expansion Plan

75 Data Collection Survey on Thar Coal Field Policy and Plan for Developing and Conducting the Coal Thermal Generation Plant The total installed capacity of existing generation plants for the PEPCO and KESC systems including IPPs is about 21,455 MW as of the end of As for thermal coal, the existing generation capacity of the Lakhra generation plant is only 30 MW and its ratio to the total of the generation capacity is only 0.1% at present. Installed capacity is shown in Figure Thermal Coal 30MW 0.1% Nuclear 461MW 2% Thermal Oil 7,838MW 36% Thermal Gas 6,571MW 31% Hydro 6,555MW 31% Source: National Power System Expansion Plan Figure Installed Capacity as of 2010 However, in order to fill in the gap between power supply and power demand, and shift the fuel of generation from high cost oil to domestic coal, many thermal coal generation plants are planned in the future. Fuel prices in US$/MMBtu are shown in table and generation plan is shown in Table Table Fuel Price Forecasts to the Year 2030 (US$/MMBtu) Unit: US$ / MMBtu Fuel As of Projection Crude Oil Imported Natural Gas Imported LNG Furnace Oil (HSFO) Furnace Oil (LSFO) Diesel Imported Coal Thar Coal Source: National Power System Expansion Plan

76 Chapter 2 Basic Data and Information Table Least Cost Generation Plan (Base Case) Generation Capacity MW % MW % MW % Hydro 6, , , Thermal gas 6, , , Thermal oil 7, , ,855 6 Thermal-coal , , Bagass and Bio Waste Plants Nuclear , ,947 6 Wind 0 0 1, ,400 5 Import 0 0 2, ,000 2 Total 21,455 58, ,639 Source: National Power System Expansion Plan Since the Thar coalfield has resource potential of 175 billion tons of coal and mine-mouth power plant is suitable due to mining coal of Thar coalfield is lignite coal which is unsuitable for long distance transportation, the thermal coal power plants using the lignite coal are planned to be concentrated in the Thar area. Year Table List of Future Plan for Thermal Coal Generation Plants Name of Project Number of Units Net Unit Capacity (MW) Total Capacity (MW) Thar #1 or Imported Coal Plant , Thar # , Thar # , Thar # , Thar # , Thar # Thar # , Thar # , Thar # , Thar # , Thar # ,670 Total 66-37,422 Source: National Power System Expansion Plan Other Relevant Plans and Information (1) Plan of Jamshoro Thermal Power Plant Jamshoro Thermal Power Plant is operated using furnace oil and dual (gas / FO) thermal at present. Its total installed capacity is 850 MW. However, since utilization of furnace oil has high cost, the Jamshoro thermal plants have an upgrading plan for utilization of coal through ADB fund. 2-49

77 Data Collection Survey on Thar Coal Field Table Summary of Jamshoro Thermal Power Plants Number of Installed Commissioning Fuel Type Unit Capacity (MW) Date Unit I 250 Furnace Oil (FO) Unit II 200 Dual (Gas / FO) Unit III 200 Dual (Gas / FO) Unit IV 200 Dual (Gas / FO) Total 850 Source: Jamshoro Power Company Limited Consequently, it has been decided, as requested by the Government of Sindh, GENCO, that the existing two units of power plants at Jamshoro be designed so that Thar coal can be used and will be upgraded to coal thermal plants. New 600 MW coal thermal plants will be constructed wherein Thar coal can be used. In addition, conclusion of coal off-take agreement with SECMC is strongly desired for coal supply to the above coal thermal plants. However, according to ADB, in case the specification for the utilization of coal is changed to Thar coal from Indonesian coal of as scheduled in the original plan, it is necessary to resubmit the project for EIA, and there is a possibility that the financing from ADB will be cancelled. Further, if Thar coal will be used for the new construction plan of 600 MW, the F/S and construction plan process will be delayed at least for one year. However, there is possibility that Thar coal can be used, at around 10%, in a mixture with other coals as per the existing plan. 2.5 Power Generation Applications and Tariff General Procedure of Application For private sector participation in the power sector, there are two authorities where application shall be made. One is PPIB, which facilitates the investor, and the other is NEPRA, which issues the license and decides the generation tariff. The outlines of their functions are explained hereafter, and their detailed functions are shown in Appendix 2-2. The PPIB s role is to provide a one-window facility for implementation of projects with more than 50 MW capacity; issue the letter of intent (LOI) and letter of support (LOS); assist the sponsor/project companies in seeking necessary consent/permission from various governmental agencies; carry out negotiations on the implementation agreement (IA); assist the power purchaser, fuel supplier and provincial authorities in the negotiations, execution and administration of PPA, FSA/GSA/CSA and WUL, respectively; issue and administer the GoP guarantee backing up the power purchaser s, fuel supplier s, and provincial government s contractual obligations; and follow up on the implementation and monitoring of the projects. 2-50

78 Chapter 2 Basic Data and Information NEPRA s role in the power business, inter alia, is to issue licenses for companies and to regulate their operations according to NEPRA rules and regulation. The general application procedure and schedule, which is introduced by PPIB, is shown in Table Table Power Generation Application Procedure and Schedule No Activity Typical Time (Allowed days) (a) Submission of proposal on raw site by the sponsors --- (b) Review of proposal on raw site by a committee under the Secretary, 60 Ministry of Water & Power, comprising representatives from PPIB, WAPDA, KESC, the Planning & Development Division, the concerned provincial or SCA (for coal-based projects in Sindh) (c) Posting of bank guarantee by sponsors at US$1000 per MW in favor of PPIB 30 (d) Issuance of the LOI by PPIB 30 (e) Initial time allowed to carry-out feasibility study/term of the LOI months, on case-to-case (f) Tariff negotiations between sponsors and power purchaser (NTDC or KPSC) b i 90 (g) NEPRA s approval of tariff 180 (h) Submission to PPIB of approved tariff. 15 (i) Submission of performance guarantee at US$5000/MW by sponsors in favor of PPIB, if tariff is approved 30 (j) Issuance of the LOS by PPIB 30 Source: Policy for Power Generation Projects Year 2002 issued by PPIB As of December 2012, only Engro Powergen (Block II in Thar) had submitted the power generation proposal to PPIB and obtained LOI from PPIB, i.e., proceeded to No. (d) in Table Tariff Structure The tariff structure of the generated power in Thar is applied as stated hereafter. (1) Currency of Tariff The tariff will be denominated in Pakistan Rupees (Rs.). (2) Capacity and Energy Components Generally, the tariff consists of two parts: (1) energy purchase price (EPP) and (2) capacity purchase price (CPP). The CPP and EPP will be expressed in Rs./kW/month and Rs./kWh, respectively. The CPP will be paid provided the plant is available for despatch to standards defined in the PPA. The EPP will be paid based upon the amount of kwh of energy despatched. In order to ensure sustained interest of the sponsor during the entire life of the project, the sum 2-51

79 Data Collection Survey on Thar Coal Field of EPP and non-debt related CPP (computed on a kwh basis at the reference plant factor) will remain constant or increase over time. The debt-related CPP stream may match the loan repayment stream. According to the past tariff determination for IPP projects, the breakdown of the CPP and EPP are as shown in Table The IRR for the equity will be given at 20% for power generation projects utilizing local coal, and 17% for those utilizing imported coal. Table Constitution of Tariff EPP (Rs./kWh) CPP (Rs./kW/month) 1) Fuel 1) Loan & Interest Payment 2) Variable O & M Foreign 2) Cost of Woking Capital Interest (WCAP Interest) 3) Variable O & M Local 3) Return on Equity during Construction period (ROEDC) 4) Return on Equity (ROE) 5) Withholding Tax (WHT) 6) Fixed O & M Foreign 7) Fixed O & M Local 8) Insurance Source: Application of Determination of Tariff AES Pakistan Limited (sample only) Incentives on the Tariff For the tariff, the following incentives are given to IPPs: a. Custom duty at the rate of 5% on the import of plant and equipment not manufactured locally; b. No levy on sales tax; c. Exemption from income tax including turnover rate tax and withholding tax on import; and d. 20% IRR for power generation utilizing local coal and 17% for those utilizing imported coal. 2-52

80 Chapter 2 Basic Data and Information Referential Tariff Generated by Coal Thermal In May 2012, NEPRA published the notice of hearing on newspapers regarding Development and Determination of Upfront Tariff for Coal Power Projects, which is attached in Appendix 2-2, and the extracted points are quoted below. The proposed tariff is for coal thermal generation projects utilizing coals except Thar. In the remarks, it is stated that the tariff model for local coal excludes Thar Coal for which a separate tariff mechanism is required owing to certain costs particular to Thar coal projects including development surcharge, etc., and separate mechanism shall be devised in due course. Although tariff has not been finalized, this tariff can be used as reference for assuming the tariff of generation utilizing the coal in Thar. Capacity 1,000 MW Origin of Coal Local Form of Financing Table Levelized Tariff Proposed by PPIB Energy Charge (EPP) Fuel cost V.O & M Total 1 st 10Yrs. Capacity Charge (CPP) Yrs. Levelized Tariff at 60% Plant Factor (Rs./kWh) (Rs./kWh/Hour) (Rs./kWh) Local Foreign Assumption Condition Plant factor: 60% Net thermal efficiency: 37% Annual net generation: 7,844 hours (90%) IRR: 20% Project life: 30 years Price of local coal: US$57/ton Heating Value of local coal: 11,023 Btu/kg Finance: 100% local or 100% foreign debt Debt service component - on local financing: KIBOR (11.91%) +3.5% - on foreign financing: LIBOR (0.45%) + 4.5% EPC cost: US$1,250 mil Variable O & M cost: US$13.18 mil Fixed O & M cost: US$25.98 mil Exchange rate: US$1 = Rs.88 Source: NEPRA Notice of Public Hearing Assumption of Tariff of Thar Generation Based on the above, the tariff of generated power in Thar is assumed in Table with the condition of 1000 MW scale plant and foreign investment. The tariff will be Rs for 1 st to 10 th year, which includes the repayment of debt, and Rs for the11 th to 30 th year, in case the coal price is US$60/ton. Where coal price will fluctuate at US$10, the tariff will fluctuate at Rs.0.818/kWh (US$1=Rs ) 10 The exchange rate of Rs.88/US$ is applied in accordance with the assumption done by PPIB as shown in Table

81 Data Collection Survey on Thar Coal Field Table Assumption of Tariff of Generation (1,000 MW Class) Fuel Water Val. EPP CPP Tariff (Coal ) O & M a b c d = a+b+c e f = d+e/0.6 1 st to 10 th years th to 30 th years Fuel (Coal) 1. Heating Value (Block II): 3,211 kcal/kg, 12,742 Btu/kg (0.252 kcal/btu) 2. Price of coal: case 1=US$50/ton, case 2= US$55/ton and case 3=US$60/ton 3. EPC cost: US$1,500 mil. for 1,000MW (US$1,500/kW) 4. Net thermal efficiency: 37% 5. Heat rate: 9,222 Btu/kW (3,412 Btu/kWh divided by 37%) 6. Coal cost per kw Case 1: US$50/1,000 x (9,222/12,724)= USȼ3.62/kWh (Rs.4.114/kWh) -Rs to Case 3 Case 2: US$55/1,000 x (9,222/12,724)= USȼ3.98/kWh (Rs.4.523/kWh) -Rs to Case 3 Case 3: US$60/1,000 x (9,222/12,724)= USȼ43.4/kWh (Rs.4.932/kWh) applied to assumption Water Charge 1. Water consumption for wet cooling: 3 t/mwh 3 L/kWh (general information) 2. Cost of water: Rs.70.5/ton Rs /L (please refer to Clause 5.2 Water Supply) 3. Cost of water per kwh: 3 x = Rs.0.212/kWh Valuable O & M Rs x US$1,500 mil./us$1,250 mil. = x 1.2 = Rs CPP 1. 1 st to 10 th years: Rs x US$1,500 mil./1,250 mil. = Rs x 1.2 = Rs th to 30 th years: Rs x US$1,500 mil./1,250 mil. = Rs x 1.2 = Rs Source: Prepared by the JICA Survey Team The tariffs for the 600MW and 300MW class are assumed in Appendix

82 CHAPTER 3 THAR COALFIELD DEVELOPMENT

83 Chapter 3 Thar Coalfield Development Chapter 3 Thar Coalfield Development 3.1 Current Status of Each Block Sindh government established and opened 12 blocks in Thar coalfield for coal development for investors in Pakistan and overseas. Figure shows Blocks I to IX, and Table shows current activities. Six out of 12 blocks have already been committed for exploration and development, including those for power generation using Thar coal. However, actual activities are only carried out in four out of the six committed blocks, of which the current status are summarized in Table Source: TCEB Sep. 20, 2012 Figure Thar Coal Blocks Layout 3-1

84 Data Collection Survey on Thar Coal Field Table Coal Mine Development and Power Plant Plan Block Allocated Investors Exploring Agency Mine Development Works Production Power Station I Global Mining (China) GSP - GESCR Rheinbraun Engineering (Germany)-USGS By October Mt/y by Oct MW II Engro SECMC GSP - GESCR Engro - USGS Engro - JORC -AusIMM By April 2013 Phase1: 6.5 Mt/y Phase2: 13.0 Mt/y Phase3: 22.8 Mt/y Oracle 1,200 MW SECMC Phase3: 4,000 MW III Cougar GSP - GESCR IV AACE GSP - USGS Initial Production 6 Mt/y --> 18 Mt/y 1,100 MW-->3,000 MW in 15 years V UCG Project CNCGB - GESCR In 10 to 12 months 8 10 MW VI Oracle (UK) CNCGB Sindh Carbon Energy Preparation works started, Development in near future 5 Mt/y by 2014 (down to 2.4 Mt by Oracle) KESC 300 MW-->1,100 MW VII Available VIII Available IX Available Source: TECB Table Current Situation of Each Block in Thar Coalfield Block Developer Exploration License Granted Bankable F/S Completed Mining Lease Issued ESIA for Mining Accepted Mining Start Planned Coal coming Note I II V Global Mining Company of China 10.0 Mt/a Sindh Engro Coal Mining Company 6.5 Mt/a (Initially 3.5 Mt/a) UCG Pilot Project by GoP October 2011 August 2009 August 2010 March 2012 May 2012 February 2012 EIA Public Hearing was done on 27 September 2012 EIA public hearing will be held in November 2012 In 2013 In 2013 Test burn conducted in December 2011and Syngas produced 3 years from the starting mining 3 years from the starting mining Financing of the project is being arranged. Financing of the project is being arranged Presently the 8-10 MW Power Plant is being established at the cost of Rs.1.8 billion VI Oracle Coalfields, PLC 2.4 Mt/a November 2007 October 2011 April 2012 In near future In years from the starting mining JDA was concluded with KESC Source: TCEB Note: For the mining of coal in Thar, all license/leases are approved by the Thar Coal and Energy Board Global Mining Company of China have got No Objection Certificate (NOC) from Sindh Environmental Protection Agency (SEPA) on EIA on 29 Nov

85 Chapter 3 Thar Coalfield Development Block I Sino-Sindh Resources, a local subsidiary of Global Mining Company, invested in Block I for coal mining and power generation of 900 MW, and signed a MoU with the Government of Sindh for the project in September The company plans to invest US$4.5 billion until Global Mining completed a bankable feasibility study in March 2012 and carried out an EIA public hearing in Islamkot on September 27, 2012 after the environmental assessment was completed. According to TCEB, preparation works for mining in Block I will be implemented soon. The company will supply the coal not only to a mine-mouth power station but also to local thermal plants and cement industry after processing to briquette. A mine-mouth power generation of 900 MW is planned after started mining. 1 st Mining area 2 nd Mining area Source: Geological Survey of Pakistan November 2002 Figure Isopach Map of Block I (left: Cumulative Coal Thickness, right: Overburden) 3-3

86 Data Collection Survey on Thar Coal Field Source: Geological Survey of Pakistan (November 2002) Figure Cross-section along Boreholes on Block I 3-4

87 Chapter 3 Thar Coalfield Development Block II In 2002, Shenhua Group Corporation of China expressed interest in Block II development, aiming to build mine-mouth power plant (300 MW x 2), Shenhua Group then sent a team of 136 coal mining engineers, geologists, hydrogeologists, and power plant specialists to open up Thar coal resources for commercial use. The company established a field camp in the desert and worked on Thar coalfield for a period of two years. In 2004, they prepared a comprehensive feasibility report, which found that the Thar lignite resource is suitable for commercial mining. Consequently, they proposed open cut mining with mine-mouth power generation of 600 MW in the first phase, to be scaled up to 3000 MW based on the lignite reserves in Block II, which has an area of 55 km 2 (0.6% of Thar coalfield area of 9000 km 2 ). Shenhua Group asked for a tariff of US 5.6 per kwh for the electricity generated by its proposed power project. At that time, IPPs sold electricity at US 6.5 per kwh to the government. However, they asked for a transmission line to be provided by the government to make up for the lower tariff that they are asking for. However, WAPDA insisted on a tariff of US 5.3 per kwh, causing the negotiations to fail. A subsequent feasibility report by Germany s RWE Company funded by the Federal and Sindh governments proved that the real commercial cost for power generation in first power project on Thar Coal, as per European standards could be up to US 7.6 per kwh. In May 2008, the Government of Sindh, through the Mines and Mineral Development Department (the predecessor of Coal and Energy Department), offered a joint venture to a private sector in the form of public private partnership, with an equity ratio of 60% for private and 40% for public. Participation and management control will be under the private partner. A joint venture company with the name of Sindh Engro Coal Mining Company was formed. It started works left unfinished by the Chinese in Block II. (Source: Coal and Energy Development Department, Government of Sindh. Published in the Express Tribune, January 30, 2012) Source: Survey of Pakistan (Nov. 2002) Figure Isopach Map of Block II (left: Cumulative Coal Thickness, right: Overburden) 3-5

88 Data Collection Survey on Thar Coal Field Source :Geological Survey of Pakistan (Nov. 2002) Figure Cross-section along Boreholes on Block II 3-6

89 Chapter 3 Thar Coalfield Development Source: Geological Survey of Pakistan (Nov. 2002) Figure Isopach Map of Heating Values (ar base), Block II Source: Borehole data:u.s. Department of Interior/U.S. Geological Survey Open-File Report Figure Seam Correlation Chart of Boreholes around Block II 3-7

90 Data Collection Survey on Thar Coal Field Source: Original data from TCEB and modified by JICA Survey Team Figure Seam Correlation Chart Line Joint working group comprising of SECMC, RWE, and SINOCOAL experts worked in RWE to finalize the 3D geological model, mine & equipment planning and cost model. SECMC team was stationed at SINOCOAL, China, to review and finalize mine position maps, equipment selection, surface water, de-watering, mine surface facilities layout and cost model. Bankable Feasibility Study (BFS) report was prepared by SECMC while numerical groundwater model and groundwater dewatering design were finalized by RWE. 3-8

91 Chapter 3 Thar Coalfield Development Final review was conducted in August 2010 in Karachi, by SECMC, SINOCOAL, HBP/SRK, and RWE experts. Final BFS report was issued to the Board of Directors of Coal & Energy Development Department, Sindh Government, on August 31, (SECMC presentation data was submitted on October 20, 2010) The main points on BFS of SECMC regarding Block II are as follows: Production Capacity : Coal : 6.5 million tons/ year, Overburden/Interburden million m 3 /year; and Selected mining method/equipment: Open pit mining using truck and shovels (T&S) instead of bucket wheel excavator as shown in Table Table Selected Mining Method and Equipment Variant -1(T&S) Variant-2 (IC-Spreader) Overburden Removal and transfer through T&S to the dumping site Removal through T&S and transfer through WTS and conveyors to the spreaders at the dumping site Coal Removal through T&S and transfer through IC to stock yard Removal through T&S & transfer through IC to stock yard (remarks) WTS: Waste Transfer Station IC: In-pit Crusher Source: BFS of SECMC Block II The Government of Pakistan (GoP) then decided to convert Jamshoro oil-fired power plant to a coal-fired power plant. Either DECMC or Sindh-Engro Coal Company will supply Block II coal to the Jamshoro coal-fired thermal power project under the coal off-take agreement, before the Block II mine-mouth generation operation. 3-9

92 Data Collection Survey on Thar Coal Field Selected Equipment Variants Overburden S/T Variant ( Variant 1) Outside Dump (+180 m AMSL) Shovel Mine (-115m AMSL) IC- Spreader Variant (Variant 2) Spreader Inside Dump Shovel Mine (-115m AMSL) Conveyor Belt Selected Equipment Variants- Lignite Stockyard (+80 AMSL) Shovel Mine (-115m AMSL) Crusher Conveyor Belt Source: SECMC presentation data on October 20, 2010 Figure Illustrations of Two Variants of Equipment Table Production Schedule (Excavation) Variant M t/a T&S Project Year Year years Cumulative Contracted OB (Mm 3 ) Owner OB (Mm 3 ) Total Waste (Mm 3 ) Coal (Mt) Stripping Ratio Source: SECMC presentation data on October 20,

93 Chapter 3 Thar Coalfield Development Source: Thar Coal Project-Block II Mining Feasibility Study Figure Infrastructure Situation of Block II Development in Block III Cougar Energy Ltd, UK, is in charge of the Underground Coal Gasification Project in Block III. Exploration license was issued on September 2009, valid for three years. According to TCEB, desktop studies are under process. JV negotiation with Fauji Foundation is undergoing; however, any other information is not provided by Cougar Block IV AustralAsian Continental Energy (AACE) expressed interest in Block IV development. According to the presentation during the Coal Conference held in October 2011, Block IV has a measured and indicated resource of 2.4 billion tons within an area coverage of 82.5 km 2. The mining plan showed that the initial production rate is 6 million tons per annum, which will then increase to 18 million tons per annum in 15 years. Mining method requires use of three 3-11

94 Data Collection Survey on Thar Coal Field bucket wheel excavators (BWE) for removal of overburden and one for lignite mining operation. The total capital cost of the mining operation was estimated to be US$1 billion. Meanwhile, the planned power station aims to generate 1100 MW initially, which will then increase to 3000 MW in 15 years. The project cost was estimated to be US$2 billion. According to TCEB, AACE has not sent any information yet. The JICA Survey Team (JST) assessed that BWE method would not be a suitable choice for mining method in coal parts in Thar coalfield Block V The Planning Commission in July 2009 approved an R&D project, and engaged Pakistan s most renowned scientist Dr Samar Mubarakmand to develop a local technology and execute the pilot project. The project is intended for the production of Syngas from Thar and establishment of Underground Coal Gasification (UCG) -based power plant with a 100 MW capacity. A test burn was ignited on December 11, The Planning Commission, GoP conducted a project appraisal in June 2012 and decided that: a. The pilot project comprising of one gasifire (36 wells) would be operationalized for power generation of 8-10 MW electricity within a period of months. b. After the successful power generation of 8-10 MW, a complete technical appraisal/review of the project would be carried out, which will serve as basis for allowing commencement of the work on the development/expansion of required infrastructure for 100 MW power generation. UCG technology in Block V A very simple burning method for the UCG is applied as illustrated in Figure The produced Syngas has 12%-15% CO 2 content and well pressure at initial and running conditions are 64 bar and 7 bar, respectively. 3-12

95 Chapter 3 Thar Coalfield Development Source: UCG Project Site Presentation at Block V, October 1, 2012 Figure UCG Production Process Detail of the UCG Technology is described in Chapter At present, Block V UCG is an R&D level project. When hydraulic fracturing/stimulation technology will be introduced in Block V-UCG project in the future, Syngas will potentially serve as one of main fuel for power generation. Photo Production Well Photo Compressors 3-13

96 Data Collection Survey on Thar Coal Field Photo Pipelines connecting boreholes Block VI Oracle Coalfields of UK was granted the first exploration licence in 2007 for Block VI covering an area of 66.1 km 2. The firm has also concluded a joint development agreement (JDC) with Karachi Electricity Company (KESC), and off-take agreement with Lucky Cement in late 2009 and early 2010, respectively. A technical feasibility study including Joint Ore Reserves Committee (JORC) coal resource of 529 million tons in the 20 km 2 of the authorized area, and 113 million tons, JORC proven coal reserve, was completed under phase 1 mining stage (Figure ). In April 2012, Oracle Coalfields was granted a mining lease, and was the first foreign coal development company in Pakistan. According to Oracle Coalfields, they will execute the development of Thar coal (Reference: Oracle Coalfields PLC Annual General Meeting on May 29, 2012). 3-14

97 Chapter 3 Thar Coalfield Development Source: Presentation of Project Status for Thar Block VI International Coal Conference, Pakistan, October 22, 2011 Figure Oracle Coalfields Mining Plan Source: Interview Oracle Staff on October 6, 2012 Figure Layout of Mining Area and Mine-mouth Power Plant in Block VI JORC: The Joint Ore Reserves Committee Code (JORC Code) is integral to Australia s reputation for offering a well-regulated and supervised marketplace that demands the highest standards of disclosure and corporate governance. 3-15

98 Data Collection Survey on Thar Coal Field The primary purpose of the JORC Code is to provide a minimum standard for the public reporting of exploration results and estimates of mineral resources and ore reserves. The JORC Code plays an important role in enhancing the integrity of reporting by mining companies, and in ensuring that disclosures contain the information investors reasonably require in making investment decisions. This is particularly critical because often, the most important information about mining companies relates to the quantity and quality of the mineral resources and ore reserves under their control. While the JORC Code serves investors greatly, it is also beneficial to mining companies themselves as reliable estimates are fundamental to the funding and valuation of mining projects and, ultimately, to the reputation of the company( According to the JDA with KESC, power station capacity is 300 MW initially, and will eventually increase to 1100 MW. A target of 5 million tons per annum was expected on the second half of 2015 to feed the power sector. In August 2012, Oracle Coalfields released the implementation plan with a significant reduction in capital expenditure from US$610 million (based on 5 million tons per annum) to an initial US$176 million (based on 2.4 million tons per annum), which represents a savings of US$434 million. The total cash cost of production is also reduced by US$18 per wet ton, from US$42 per wet ton to US$24 per wet ton, over the mine life based on a 2.4 million wet tons per annum mine (Reference: Oracle Interim Results on June 30, 2012). The remaining works before starting mining in the block are: Carrying out topographic survey to define the boundaries of the open pit, water treatment area, coal processing areas, waste dump area, and mine infrastructure complex, as well as the footprint for the initial 300 MW plant, to be developed by KESC, adjacent to the mine; Infill drilling of approximately 40 non-cored boreholes for the opening of the mine box-cut, which will be carried out by December 2012; Carrying out of resettlement program by the environmental and social consultants. 3-16

99 Chapter 3 Thar Coalfield Development 3.2 Geological Assessments Main Issues and Countermeasures in Thar Coal Development (1) Overburden Removal Issue: Removal of very thick sand dune and alluvial sediment Proposed Action: Mining technology for removal of thick overburden is applied for many lignite mines around the world. The best method, which is combination of BWE, T&S, Surface miner, and belt conveyor, is already studied in the BFS. It is important that at an early stage, mining experts from Pakistan visit some of the principal lignite mines in other countries to find out when BWE system is practically used, and where T&S method is used. The advantages and disadvantages of different mining methods shall be well understood by the experts involved in mining in Thar. (2) Dewatering Works Issue: Abundant underground water above and under the coal seam zone in Thar coalfield while Lakhra coalfield has no groundwater. Groundwater significantly affects mining safety and total moisture content of raw coal. Proposed Action: Water Master Plan, including detailed feasibility level hydrogeological study, water supply and waste water management studies, is already in progress. The studies will identify. The level of groundwater available Level and extent of dewatering Designing of a comprehensive dewatering plan. It will certainly include drilling of production wells, monitoring piezometers, dewatering system and implementing schedule The areas that will be affected by extracting this groundwater Assess the potential impacts of groundwater usage and disposal as a result of mine dewatering Assess the zone that will be influenced by use of this groundwater. Moreover, the block developers also designed dewatering programs and schedules. Groundwater control is discussed in 3.4 Hydrology. 3-17

100 Data Collection Survey on Thar Coal Field (3) Quality Control Issue: Consumers usually require a stable quality of coal with characteristics such as low ash and low moisture content. Lessons learned from Lakhra: In Lakhra Power Plant, the coal supplied by the Lakhra Coal Development Company (LCDC) seems to be of lesser quality than the one required by the boilers, resulting in accelerated deterioration over a short period. Similarly, mismatch between required quality and supplied quality were reported in Thailand and Mongolia. Proposed Action: Selective mining and coal processing must be applied to obtain a product with stable and acceptable quality. The following actions and studies are needed to make selective mining practical and effective: Careful exploration and geological correlation study with enough infill drillings; Mining planning: detailed selective mining by skilled mining engineers and technicians; Reducing in-seam dilution during mining coal operation; Crushing and screening; Laboratories at stockpiles/check the quality of ROM from each area; and Making the feed quality to power plant suitable for use using blending at the stock yard. Proposed Actions for Power Plants: Confirm the delivered coal from the mine stock yard is acceptable, and record the quality of each stock; and Blending coal of stock piles into most suitable quality level Estimation of ROM Coal-bearing section in Thar coalfield usually consists of coal parts and interburden materials. Thin partings are interbedded in the coal parts. Selective criteria on coal mining are decided before mining planning in concerned areas. One example is shown in Figure below. 3-18

101 Chapter 3 Thar Coalfield Development Source: Borehole data: U.S. Department of Interior/U.S. Geological Survey Open-File Report , with additions by JICA Survey Team Figure Selective Mining Criteria Example - Coal seam > 0.5 m thick ---- extracted independently as coal - Partings < 0.3 m thick ---- extracted together with coal - Coal seam < 0.5 m thick ---- removed as rock - Partings > 0.3 m thick ---- removed independently Estimation of run of mine (ROM) is very important for coal processing system and planning of coal-fired power plant Controlling Spontaneous Combustion Low-rank coals like lignite are more susceptible to spontaneous combustion than high-rank coal like bituminous coals. When lignite is stacked, and air reaches the middle of the stockpile, oxidation starts and heat is produced within the stockpiled coal. This heat may not be able to escape, and in the warmer environment, the reaction rate of oxidation increases. If the pile is left long enough and air percolates into it, then in extreme situations, it can catch fire uncontrollably. As a result, mine operators must put up a sign or evidence of the susceptibility of their particular lignite and take precautions accordingly (IEA Clean Coal Centre, April 2004). Lignite tends to become powder easily when it lignite dries. Oxidation takes place at the increased surface area among coal fragments. Furthermore, in case of coal piled up at stock yard, the heat produced could not easily escape, and will remain inside. This is the most common phenomena leading to spontaneous combustion. Other lignite resources in the world are positively applied with various anti-oxidation methods to suppress the spontaneous combustion. Transportation by truck is carried out without problems in other countries. Lignite experts and coal thermal power generating engineers in Pakistan are recommended to adopt the best technology. 3-19

102 Data Collection Survey on Thar Coal Field 3.3 Mining Technology for Surface Mining Mining Equipment and System (1) Historical Review of Mining Plan for Block II Many studies have been carried out for Block II including the geological study by USGS. Obtained information on mining plan for Block II are as follows: Table Mining Plan for Block II Year/Month Prepared by Outline 1994/May John T Boyd (USA) Comparison between large BWE and large T&S 2004 RWE (Germany) Comparison of large BWE and large T&S Shovel 42 m 3, 21 m 3 Dump Truck : 300 ton, 150 ton Surface Miner (referred large scale lignite mine in Germany) 2004 Shenhua Group(China) Production Level : 3.5 million ton/year 2010/August RWE Two options (Variant 1, Variant 2) remain as possible mining system: Variant 1: Overburden removal by T&S Lignite extraction by T&S, ICC and BC Variant 2: Overburden removal by T&S, WTS, BC and Spreader Lignite extraction by T&S, ICC and BC BWE will be examined during T&S replacement. 2010/October 2012/September Source: TCEB SECMEC,SCIGE, RWE SECMEC (ESIA study) Final selected equipment are 6 m 3 excavators and 55 ton dump trucks Surface miner will be utilized for obtaining lignite. Crusher and belt conveyor will be used for lignite transportation. 6 m 3 excavators and 55 ton dump trucks for overburden removal. 2-6 m 3 excavators for obtaining lignite. Semi-mobile crusher and belt conveyor for lignite transportation All the studies selected the open-cut mining method. Moreover, the recommended most applicable equipment are the BWE and T&S. The studies compared the advantages and disadvantages of each system; however all the studies were prepared after 2010, which showed negative opinion on BWE. Thus, this recommendation is reasonable if local conditions such as equipment transportation from port to the mining site, erection works at site, and flexibility of the operation are taken into consideration. 3-20

103 Chapter 3 Thar Coalfield Development (2) Outline of the Mining Plan for Block II The latest mining plan referred from the Thar Coal Block II Mining Project Environmental and Social Impact Assessment prepared by Hagler Baily ( September 3, 2012), are as follows:. Total production 360~380 million tons of lignite Production level First phase 6.5 million tons (for 1200 MW) Second phase 13.0 million tons (for 2400 MW) Third phase 22.8 million tons (for 4000 MW) Mining method Mining area Overburden removal Dewatering Mining equipment Coal storage Mine Service Facility (MSF) Water supply Power supply Fuel supply Surface mining (Open Cut method) T&S The southern one-third area of the Block II, the initial mining area, which is about 20 km² Overburden from construction and the initial stage will be dumped in an outside waste dump area located in the eastern corner of Block II. The dump will have a volume of 586 million m 3 and will reach a maximum height of 88 m. Surface water and groundwater inflows into the mine pit will be dewatered using submersible pumps installed in sumps at the base of the open pit. The rate of disposal has been estimated at 990 liters per second (l/s). The effluent water from the wells will be collected through a network of pipes to a main sump from where it will be disposed through a disposal system to be developed by the GoS. Excavator 2 6 m 3 Dump Truck 55 tons x 136 units Semi-mobile crusher 1000 tons/h x 2 units Belt Conveyor Coal will be delivered via haul trucks to the crusher, where it will be crushed to sizes less than 300 mm. Crushed coal will be delivered to the coal storage yard having a capacity of 450,000 tons, by belt conveyors. The stockpiles within the coal storage yard will reach a maximum height of 12 m. The coal storage yard will be partially enclosed with a 15 m high wind shield wall around the perimeter of the yard. A centralized mine service area covering 52 ha of land is proposed. The facilities and services in the area will include offices, social facilities, workshops, spares and consumables stores, fuel storage, operation control room, canteen, locker room, training center, polyclinics, fire station, laboratory, water treatment, water supply, etc. Raw water required for the mining operation is about 6000 m 3 per day. GoS will supply the required water. During construction and the initial phase of operation, power will be supplied by diesel generators. Subsequently, power will be provided from the power station based in Thar coalfield. Annual High Speed Diesel (HSD) consumption is estimated to be about 3-21

104 Data Collection Survey on Thar Coal Field 55 million liters. Average consumption is about 150,700 liters/day. Fuel storage for 15 days is required. Wastewater disposal Housing colony Fire protection Employment : About 1000 m 3 /d of wastewater will be produced. Wastewater will be treated in a treatment system, and the treated water will be used for dust suppression. Mine Service Area 370 m 3 /day (0.15 cusec) Township 500 m 3 /day (0.20 cusec) Oily water (mine service) 160 m 3 /day (0.07 cusec) The water will be treated by Membrane Bioreactor (MBR). A new township with an area of 150 ha will be developed near the village of Bitra in the northeast corner of Block II to house 3000 to 4000 people. It will have its own hospital, shopping areas, education facilities, and recreational areas. Fire protection system will include a central fire water network with adequately located fire hydrants, monitors, pumping station, fire extinguishers, and a fire brigade. To prevent self-ignition of the lignite on mining bench, coal seam will only be completely exposed from the overburden just before excavation. Similarly, dust suppression on the stockyard and at the lignite transfer point will be done. At the stock pile, lignite delivery will be controlled, and delivered within 15 days. The mining project would require employment of between 1200 and 1600 skilled and unskilled workers. As a policy, preference will be given to persons from the local communities and the region for the jobs related to mining activities. As the persons with required skills are not available locally in Thar, a training program will be initiated for suitable persons from the local communities in order to perform the jobs offered by the mining project. (3) Validity of the latest Mining Plan 1) Validity of Mining System In the 2010 study, T&S method was recommended for the initial stage, while BWE was set aside as a future option. ESIA study prepared by Hagler Bailly Inc., submitted in September 2012, included the mining plan, which has the same concept as the 2010 study although minor corrections were made. Such concept is reasonable. At the initial stage of the development, removed overburden using T&S will be transported to the outside dumpsite area. In pit dump or backfilling will be carried out after suitable conditions are established. T&S method will also be used for obtaining lignite. Then, the lignite will be crushed using semi mobile crusher located at the pit side, and transported to the stock pile through a belt conveyor. If the mobile crusher will be utilized at the pit bottom, shifting of the belt conveyor and multiple transfer points will be required, which are complex tasks. Operational control is easier if the trucks will haul up to the top of pit and crush the lignite, which will be transported through belt conveyors. It is recommended to remove the partings as much as possible during lignite extraction. 3-22

105 Chapter 3 Thar Coalfield Development For this purpose, small shovels, bulldozer and front end loaders will be required. As the slope stability of upper sand zone is weak, slope angle must be kept in a low angle. The latest plan includes this concept, which is reasonable. Utilization of a mining contractor for pre-stripping of the overburden at the initial stage of the development is included in the plan. This leads to minimizing the initial investment. Contract between owner and contractor could be on an Rs/BCM basis. However, dewatering of the underground water using water wells could be the owner s responsibility. Considering the improvement period for the access road from port to the mine location, mobilization of small equipment could be arranged by the contractor. 2) Validity of the Equipment Selection Final selected equipment shown in ESIA prepared by Hagler Bailly is reasonable. Sizes of equipment are in conformity to the improvement plan of the road. At the initial stage of development, mining contractor may use smaller equipment which can be purchased easily and can be utilized for the other projects after completion of the contract. Improvement plan for the road is discussed in Chapter 5, but the main objective of the road project is to provide access for the transportation of the mining equipment to Thar coalfield development, and to improve logistics and worker s transportation. The dimensions and weight of the mining equipment considered for road design are 5.5 m width by 5.5 m height, and 350 ton maximum weight, respectively. This size and weight conform to the equipment selection described in the ESIA prepared by Hagler Bailly. Required number of 136 dump trucks shown in ESIA is almost the same as the estimation made by the JICA Survey Team, which appears to be a realistic quantity. The 131 units of dump trucks as the final selected equipment, stated under Thar Block-II Coal Mining Project, Bankable Feasibility Study Presentation to BOD is close to the 136 units required. ESIA however, did not mention about the quantity of 6 m 3 shovels. Considering the handling performance of a 6 m 3 shovel and total volume of materials to be moved, estimated required number of shovels will be about 26 units. Consequently, allocated dump trucks per shovel are about 5 units. As Thar Block-II Coal Mining Project, Bankable Feasibility Study Presentation to BOD stated 26 units, both reports are reasonable. Wide open pit needs to be allocated for the 26 shovels. Multiple benches are necessary for Thar deep pit development, and thus, allocation of 26 units is suitable. Semi-mobile crusher and belt conveyor system is described in ESIA for the lignite transportation. Since long transportation distance is expected in the future, application of this system is ideal. Thar Block-II Coal Mining Project, Bankable Feasibility Study 3-23

106 Data Collection Survey on Thar Coal Field Presentation to BOD described the 1.4 m width with 2000 tons/h transportation capacity as the belt conveyor specification. This capacity is sufficient for dual operation of two crushers with a capacity of 1000 tons/hour. The 2000 tons/hour capacity is sufficient for 6.5 million tons of annual production, while 742 tons/hour is the minimum capacity if the conveyor system can operate for 24 hours/day and 365 days. There are two types of crusher equipment namely, mobile type mounted on a crawler and semi-mobile type mounted on a skid. Considering the required accelerated rate of pit mining, semi-mobile crusher is recommended for this project. Consequently, crusher relocation and belt conveyor extension will be carried out periodically. It is recommended that the lignite transported by dump trucks will be dumped and stocked temporarily beside the crusher. Then front end loader (FEL) will load the lignite to the hopper of crusher. Movable hopper will be installed on the belt conveyor so that the lignite will not spill out from the conveyor. Direct loading from dump truck to the conveyor seems to be more efficient. However, this method may cause problems considering the dumping height of the dump truck, and in case the conveyor breaks down, operation of the dump trucks will also be stopped. Nevertheless, even if the recommended system is a double handling system, advantages still govern over these problems. 3) Validity of the Other items in the Plan a. Annual fuel consumption:55 million liters of annual consumption are described in ESIA. As the annual production is 6.5 million tons, 8.5 liters will be required for one ton production. Hence, fuel cost will be the major portion of production cost. Such quantity is almost the same as the estimation made by the JICA Survey Team, which is realistic. Since average consumption of fuel is about 150 kiloliters, transportation and storage will be vital. b. Manpower : Around 700 workers are estimated for the bigger T&S fleet for example, 20 m 3 shovels and 200-ton dump trucks. For middle size fleet as described in ESIA, around 1200 staff and workers are the estimated direct manpower. Total labor cost will not be a major portion of the production cost even if the total employment is staff and workers in Pakistan. Thus, the manpower plan is also reasonable. In the future, labor cost may increase, leading to increase in production cost. If the road condition will be upgraded in the future, upsizing of the equipment fleet is worth to consider. In this region, there are no experiences on coal mine development using heavy equipment. Job performances of operators are very important for efficient lignite production. Considering that training of operators is important, the development plan is suitable as it includes a training program. Moreover, the training for maintenance staffs is 3-24

107 Chapter 3 Thar Coalfield Development required. c. Prevention of the spontaneous combustion: Prevention plan against spontaneous combustion is necessary. As the lignite may cause spontaneous combustion in a short amount of time, it will not be realized until just before obtaining lignite. Also, the maximum storage duration of lignite at stock yard shall be limited to 15 days. d. Dewatering: Even if rainfall is not considerable in the area, the mining pit should be kept free from inflow of rain water. Aquifers are confirmed in the area, and it is necessary to lower the underground water level before mining activity commences. Dewatering plan is also required since dewatering by well pumps and in pit drainage is included in the plan. Capacity of the dewatering system should be reviewed based on actual conditions. Wastewater disposal plan is also essential. The water will be discharged to the system to be prepared by the provincial government after being treated. Some of the treated water can be utilized for dust suppression of the mining activity. Water drainage system using well pumps is utilized at some coal mines. For example, in the coal mine located at the seashore of Semirara Island in the Philippines where the elevation of the pit bottom is lower than sea level, pumping well to extract water is required. Another example is the Baganuur coal mine in Mongolia, where water with high iron content is discharged to the river after being treated. In case of the underground coal mines with high underground water quantity, dewatering boring will be drilled in advance to develop the gallery. e. Water Supply: There is a possibility that the wells for local people will run dry due to dewatering for mining activities. Hence, appropriate water supply from other sources such as Nabisar reservoir is planned. f. Electric Supply: It is reasonable to provide diesel generators for the initial development stage. Also, it is essential that electricity be available after the commissioning of the mine-mouth power plants. g. Mine Service Facilities (MSF): The MSF plan including the construction of the office, residence, workshop, and warehouse is necessary. At the initial stage of development, it is the normal for mining contractor to construct temporary camps for their use. h. Mine Closure Plan: Method of closing the mine is necessary to be studied before it is opened. Thus, it is necessary to consider mine closure plan in the overall plan. Dump pits in mined out areas will be backfilled. However, as the volume of lignite is huge, backfill materials are not enough to restore the original ground shape, even if materials will be transported from outside the dump. From the viewpoint of economic development, 3-25

108 Data Collection Survey on Thar Coal Field the final shape of pit (or hole) should be accepted. After stopping the well pumps, underground water level will rise, and the pit will turn into pond. Monitoring of the water quality will be continued as well as its treatment, if necessary. Water level in the wells for the people may increase; however, monitoring of the water quality must continue. Vegetation and landslide protection should be taken into consideration for the outside dumping area. (4) Study of Mining System at Adjacent blocks The information obtained on the adjacent blocks is limited. The mining system can be estimated through published information such as environmental assessment. 1) Block I Global Mining (China) studied the mining method using dragline, BWE, and T&S. Four methods remained as Selected Mining Alternative, but final selected method is not clear. Among the methods are BWE and T&S, which are both included in with Surface Miner and without Surface Miner cases for thin lignite seams. 2) Block IV Oracle is planning to operate using T&S method. The adjacent mines also share the same issues to be cleared such as road, water supply, wastewater disposal, etc Cost Performance Price of a coal quality similar to Thar lignite in the international market is lower than US$30 per ton. Even if the Thar coalfield has issues such as weak strength of the covering material and big amount of underground water, lower stripping ratio is very attractive for development. Consequently, the stripping ratio in Thar is as attractive as the average of that of other countries. As mentioned, price of similar coal is lower than US$30 per ton. In other words, this is profitable since production cost is much lower than this price. In case of Thar coal development, production cost may not be so high because of the low stripping ratio. Also, the short transportation distance is advantageous to the customer. Another advantage is the lower labor and construction cost in the township, as it will promote manpower employment. In the report Thar Coal Power Generation Potential 2008, the result of the study by Shenhua prepared in 2004 was included. The study was for 600 MW and 3.5 million tons of lignite production. Estimated investment cost was CN 3,765 million (US$454 million). BWE s 3-26

109 Chapter 3 Thar Coalfield Development estimation of the initial and replacement investment for 6.5 million tons per year in 30 years is about US$2,000 million. Considering the service life of the equipment, initial investment cost might be less than US$1,000 million. The JICA Survey Team reviewed the investment cost and production cost. Investment cost estimation by the JICA Survey Team for 6.5 million tons of annual production is nearly double that of the Shenhua study, which is mainly due to the difference in production level. It is also realized that the JICA Survey Team estimation is similar to that of the RWE study. Conditions of the study are as follows: Annual production 6.5 million tons Mining system Truck & Shovel Heavy equipment 6 m 3 Shovel, 55-ton Dump Truck Mining schedule As of Table Average stripping ratio As of Table 3.1-4, average 6.98 : 1 for 30 years IRR Estimated with 20% of Incentive for equity portion Interest rate 10% (referred to KIBOR) Fuel cost Referred to market price Labor cost Referred to JETRO report The production cost was estimated by the JICA Survey Team by referring to the former report and abovementioned conditions. Major components of the production cost are fuel, parts and maintenance, and depreciation of the heavy equipment. In order to minimize these costs, training for operators and maintenance staff are important. Moreover, management of equipment utilization is important. Maintaining the high availability and utilization of equipment is a key factor in minimizing the production cost. In order to avoid the risk of spontaneous combustion, stable production and delivery of lignite is also important. In other words, production level of the mine and consumption of power station should be at the same level. Considering the estimated production cost corresponding to the service life of the mine, cost is not so high due to the low stripping ratio. However, long pre-stripping period gives a significant impact for the production cost in the initial development stage. In order to overcome this impact, 20% of incentive IRR for the equity portion is offered for the project owner. In this condition, the short payback period can be achieved, making the condition attractive to investors. Even if the price is much higher than international coal prices, national profit should be taken into account. Hence, working opportunity and savings in foreign currency are achieved through the Thar coal development. 3-27

110 Data Collection Survey on Thar Coal Field Japanese Coal Mining Technologies (1) History of Japanese Coal Industry and Its Current Status In Japan, combustible rock coal was found during the 15 th century. History of its coal industry is more than 250 years old. Coal played an important role for the primary energy in Japan, which produced 56 million tons of coal from around 600 coal mines in Then, during and after the World War II, production was reduced, but increased again to 55 million tons in 1961 as its peak volume. During this period, top primary energy source of power generation has changed from hydraulic to coal. Gradually, coal production had been reduced due to energy conversion from coal to oil, and low price of imported coal. Many coal mines were unable to withstand these circumstances and stopped production. In the year 2010, total coal consumption in Japan was about 185 million tons, including thermal coal and cooking coal, but more than 99% were imported from overseas. Presently, small coal mines are operating in Hokkaido area, where one coal mine produces coal from underground mine, while the other seven coal mines produce by open cut method. The total annual production from these mines is about 1.2 million tons, and less than 1% of this is for domestic consumption. Most of the coal is consumed at the power station in Hokkaido, where a power station located at its inland area was designed for domestic coal. Hokkaido coal has the advantage of cheaper transportation cost compared with imported coal, which needs to be transported on a long distance through the sea port. (2) Open Cut Mining Technology As mentioned above, open cut mines are operating only in Hokkaido. Generally, such mines are operating in the mountainous area with steep and complex geological conditions, and small scale T&S fleet is utilized for production. Hence, the Japanese open cut coal mining technology is not an applicable reference for Thar coal development. In Japan, rehabilitation of mined out areas is strictly controlled by the government, and vegetation of the waste disposal area is necessary. Also, land stability and wastewater control are considered important even after closing the mine. 3-28

111 Chapter 3 Thar Coalfield Development Source: CRME Photo Open Cut Coal Mine in Hokkaido (3) Underground Mining Technology In Japan, several underground mining methods have been applied. For a long time, small-scale manual underground operation was the major mining method. In order to improve productivity, mechanized mining method was introduced in some mining areas. The coal mines are supported by the government coal policy. Moreover, technology was improved using government subsidies. The following are the major underground mining technologies applied in Japan: 1) Fully Mechanized Longwall Mining Method Fully mechanized longwall mining method is widely applied in many countries including the USA and Australia. Japanese coal mine also utilized this method for flat coal seams. The productivity of this method is very high compared with other mining method. Although mining recovery is high initial investment is large. Roof of the longwall face is supported by a power roof support (PRS) operated using hydraulic oil (high pressure emulsion). Coal face is cut by double ranging drum shearer mounted on the armored face conveyor (AFC). AFC convey the coal to the stage loader equipped with the crusher, and discharge to the tail end of the main gate belt conveyor. After cutting the coal face, PRS will advance to the front by hydraulic shifters. A plow which slices the coal face in a plane is also utilized instead of the double ranging drum shearer. 3-29

112 Data Collection Survey on Thar Coal Field Coal Seam Power Roof Support Stage Loader Drum Shearer Drive Unit of AFC Source: CRME Figure Fully Mechanized Longwall Mining Method Source: JCOAL Training Material Photo Fully Mechanized Longwall Face 2) Single Prop and Iron Bar Mining Method Instead of PRS, roof of the longwall is supported by a single prop and iron bar. Until the fully mechanized longwall method was introduced, this method was widely used in Japan. Chain conveyor is utilized for flat coal seam, and gravity transportation is utilized if the dip of the coal seam is more than 20 degrees. Both manual and mechanical means of obtaining coal can be applied under this method. The two types of single prop are hydraulic type and friction type. Currently, hydraulic type is the most common and widely utilized in the world such as in Chinese and Vietnamese 3-30

113 Chapter 3 Thar Coalfield Development coal mines. After cutting the coal face, iron bar will be extended, and single prop will be installed. Then, face conveyor will be shifted to the face and recover the prop and iron bars from coal (mined out) side. (a)plan view 1.Single Prop 2.Iron Bar 3.Wood 4.Conveyor 5.Shearer 6.Install 7.Remove (b)detailed (c) Cross section Source: JCOAL Training Material Figure General Layout of Single Prop and Iron Bar Method 3) Room and Pillar Mining Method Room and pillar mining method is also known as board and pillar. In this method, coal pillar remains unrecovered, and roof can be maintained without collapse or free from surface subsidence. In Japan, this method was widely utilized with manual means of obtaining coal until the longwall mining method was introduced. In recent years, this method was not common in Japan. In other countries, room and pillar method using the continuous miner and shuttle car is adopted. Coal recovery ratio is lower than the 3-31

114 Data Collection Survey on Thar Coal Field longwall mining method. However, although investment cost for this method is cheaper than that for fully mechanized longwall method, its productivity is lower. After advancing to the mining border, it is possible to recover the pillar for high mining recovery. However, the surface is not free from subsidence. Source: JCOAL brochure Figure Concept of the Room and Pillar Mining Method Source: Equipment manufacturer Photo Continuous Miner 4) Saw Mining Method Saw mining method was applied for steep coal seams with a dip of more than 30 degrees. Usually, productivity of this method is low because of manual operation, but the coal can be recovered in steep coal seams where mechanized method is difficult to use. Investment cost is low but backfill materials are necessary. Pneumatic coal pick is used to obtain coal, or blasting is performed for higher productivity. Coal will flow down to the gate gallery by gravity, and transported to the surface through belt conveyor or mine cars. 3-32

115 Chapter 3 Thar Coalfield Development Plan view Upper Gallery Lower Gallery Goaf (Mine out) Filled with Rock A-A cross section Face dip degrees Flume Flume Source: Mitsui Coal Mining Figure Conceptual Layout of Saw Mining Method 5) Hydraulic Mining Method Hydraulic mining method utilizes remotely operated hydraulic monitor (canon). Coal seam is cut or crushed using high pressure water. A huge amount of water is required for this method, as the coal is flown down with water through the flumes. After dewatering, coal will be transported through a belt conveyor or mine cars. Special geological conditions will be necessary for this method considering that the roof and floor materials should have high strength to prevent collapse. Moreover, selective mining is difficult with this method since the top sulfur layer of the upper portion of the coal cannot be separated. 3-33

116 Data Collection Survey on Thar Coal Field Source: CRME Figure Conceptual Cross Section of Hydraulic Mining Method Source : CRME Photo Monitor (Canon) for Hydraulic Mining Method 6) Other Coal Mining-Related Technology in Japan In order to produce a competitive price of coal with high safety level, several technological improvements have been attempted in Japan. The following technologies are still commonly adopted in the world: - Centralized monitoring system for underground coal mine; - Gas and dust explosion, and spontaneous combustion countermeasures; - High speed transportation system; and - Integrated coal preparation technology. 3-34

117 Chapter 3 Thar Coalfield Development 3.4 Hydrogeology Groundwater Situation The Thar coalfield area has at least three aquifers. However, the classification of aquifers varies from the reports for each block, although aquifer conditions are almost the same. Subsequently, the groundwater situation will be explained on the basis of Block II aquifer classification (Sindh Engro Coal Mining Company, 2010). These aquifers with columnar section are shown in Figure while the characteristics of the aquifers are summarized in Table Source: Sindh Engro Coal Mining Company (2010) Figure Aquifers in Thar Coalfield Area Table Characteristics of Aquifers Name of Aquifer Lithology Depth / Thickness (m) Recharge Permeability (m/sec) (1) Sand Dune Aquifer Bottom of sand dune, fine grained silty yellowish sand / 0 5 Rainfall, 10 mm/year 7 x 10-6 (2) Coal Seam Roof Aquifer (Subrecent Aquifer) Bottom of subrecent, silty to coarse sand with partly substantial fractions of fine gravel / 0 12 Poor (Indian side) 1 x 10-4 (3) Coal Seam Floor Aquifer (Footwall Aquifer) Bottom of Bara formation, medium to coarse sand, partly silty with more or less numbers of small clay (stone) beds / Mm 3 /a From Northeast (Indian side) 1 x 10-4 (pure sand) Source: Sindh Engro Coal Mining Company (2010) 3-35

118 Data Collection Survey on Thar Coal Field Most of the Thar village people depend on groundwater in sand dune aquifer for their domestic consumption and cattle use. Groundwater in other aquifers is used only to a limited extent, in some deep wells. The groundwater in all aquifers is of brackish quality with TDS values in the order of around 3,000 to 8,000 mg/l (Sindh Engro Coal Mining Company, 2010). (1) Sand Dune Aquifer Sand dune aquifers exist all over Thar coalfield as well as in the Indian side. The thickness of this aquifer is only around 0 m to 5 m. The groundwater table is, in general, about 50 m to 60 m below ground surface, which is just at the boundary between sand dune and subrecent formations. Groundwater level fluctuates up to 2 m. The aquifer sediments consist of fine grained silty yellowish sand. The permeability is in the order of 7 x 10-6 m/sec. Recharging of this aquifer is direct through rainfall infiltration. It may not exceed 10 mm per year due to the low rainfall of around 200 mm per year, and high potential evaporation of about 1900 mm per year. (2) Coal Seam Roof Aquifer (Subrecent Aquifer) Coal seam roof aquifer is formed at the base of the subrecent formation. It is spread out all over the Thar coalfield area. It consists of silty to coarse sand with partly substantial fractions of fine gravel, which has a thickness from almost 0 m to about 12 m with an average of 6 m. Its permeability varies but could be in the average value of around 10-4 m/sec. Recharging of this aquifer is from the Indian side where the subcrop sediments beneath the sand dune is about 200 km to the northeast from the Thar coalfield. The aquifer is confined. The pressure head compared to the overlying sand dune aquifer is partly below the subrecent aquifer, and partly at the same level or even above. (3) Coal Seam Floor Aquifer (Footwall Aquifer) Coal seam floor aquifer covers the whole Thar area and is the main aquifer in the region. It has a varying thickness of about 30 m to 50 m (Block II) and about 60 m (Block I). The aquifer is made up of medium to coarse sand, partly silty with numerous quantities of small clay (stone) beds. The permeability of pure sand is about 1.5 x 10-4 m/sec. Due to the intercalations of claystone beds, a total permeability of 10-4 m/sec was adopted for the groundwater model calculation. Groundwater recharge is also from the Indian side where this footwall aquifer subcrops 3-36

119 Chapter 3 Thar Coalfield Development beneath the sand dune about 200 km to the northeast. The aquifer is confined and has high water pressure. Dewatering from this aquifer is the key issue to keep the mine safe and dry Dewatering Dewatering will include surface and groundwater handling. These systems are generally independent and are critical for ensuring dry and safe mine operation. (1) Surface water dewatering In Block II, surface water dewatering at the bottom of a bench is designed on the basis that dewatering time for storm rainfall event (100 mm in 1 day) is 12 days. Dewatering of normal monthly average rainfall of 80 mm will be 1 2 days. To prevent rainwater from entering the pit from surrounding areas, two flood control dams are planned to be constructed (Sindh Engro Coal Mining Company, 2010). (2) Groundwater dewatering To estimate the amount of groundwater to be dewatered, numerical groundwater model, GWDREI, based on the finite volume method is used for Block II. The result of this simulation can be applied to the other blocks because general groundwater situation is almost the same as Block II. This model for Block II is a quasi 3-dimensional multi-layer groundwater model. Modelling area is 9,700 km 2 and has a perimeter of some 400 km. The developed groundwater model consists of 2 aquitards and 3 aquifers. The flow in the aquifers is assumed to be 2-dimensional horizontal while the flow in the aquitards is assumed 1-dimensional vertical. Model settings, analytical conditions and boundary conditions, as well as the parameters and cases are summarized in Table 3.4-2, Table 3.4-3, and Table 3.4-4, respectively. Theoretically, a total of more than 110 single or multilayer wells of 600 mm diameter will be drilled during the lifetime of the mine to keep it dry. According to the results of the simulations, groundwater volumes to be pumped will be around 35 Mm 3 /a from 2012/2013 up to Thereafter, the volumes will steadily decrease to 25/20 Mm 3 /a at the end of the mining operations. Most of this water is pumped from the footwall aquifer (90%), while the subrecent aquifer and sand dune aquifer will deliver about 9% and less than 1%, respectively. The pumped water from all aquifers is brackish with TDS of up to 10,000 mg/l and high concentration of NaCl. The water will be discharged to the artificial disposal lake located about 7km from Runn of Kutch and Ramsar site through pipeline to be prepared by GoS 3-37

120 Data Collection Survey on Thar Coal Field Impact of dewatering on the local groundwater table is expected to be limited on the basis of the results of the simulations. However, the sensitivity analyses has shown the possibility of high permeability of 1 x 10-7 m/sec of aquitard between sand dune aquifer and subrecent aquifer may cause the groundwater in the sand dune aquifer to seep into the subrecent aquifer. The infiltration simulation has been carried out to determine if the sand dune aquifer will be affected by the dewatering. The infiltration wells must be placed in the subrecent aquifer. A total of about 13 wells would be necessary with an infiltration rate of around 15 L/sec (Sindh Engro Coal Mining Company, 2010). There is enough time to minimize the influence in sand dune aquifer on the basis of the simulation. The most important thing is that the groundwater table of the first aquifer has to be monitored carefully. Table Model Settings, Analytical Condition and Boundary Condition Model Setting Area 9,700 km 2 Perimeter 400 km Application (Code) GWDREI Analytical Method Finite Volume Method (89 years) mine bottom reached Analysis Period end of activities Analytical Conditions - approx groundwater levels stable (i.e., when the final lake shows no rising water table) Calibration Model Time step Initial Condition 1 year Observed GW contour Aquifer Parameter Refer to Table Analytical Case Refer to Table Effective Recharge Shallow Well Abstraction Pumping Rate of Deep Tubewells 5.15 mm/year 5.15 mm/year 4 wells - 100,000 gal/day (whole year) - 80,000 gal/day (whole year) - 75,000 gal/day (half year) - 25,000 gal/day (half year) Prediction Boundary Condition Dewatering wells Infiltration wells Inside Dump Final Lake North, west, and south-west: Interpolated water level South-east: no-flow boundary (Rann of Kutch Fault) Total 110 single or multilayer wells of 600 mm diameter Installation in 2 nd Aquifer Kf = 2.0 x 10-7 m/s Lake Surface Potential Evaporation = 1700 mm/y (1900 mm evaporation 200 mm rainfall) Source: Sindh Engro Coal Mining Company (2010) 3-38

121 Chapter 3 Thar Coalfield Development Formation Table Analytical Parameters Aquifer / Aquitard Permeability [m/s] Specific Storage Coefficient [1/m] Effective Porosity [ ] Dune Sand Dune Sand 7.00 x x Sandy silt / clay 1 st Aquitard 5.00 x 10-9 Middle/coarse sand Subrecent 1.00 x x Coal seams / clay 2 nd Aquitard 1.00 x 10-9 Footwall sand Footwall 1.00 x x Source: Sindh Engro Coal Mining Company (2010) Case Table Analytical Cases Scenario Condition Simulation I Basic simulation of calibrated model Refer to Table Simulation II Simulation III The influence of the mine on the first aquifer (Sand Dune) 1 st aquitard : Kf = 5.00 x 10-8 m/s 1 st aquitard : Kf = 1.00 x 10-7 m/s Simulation IV Infiltration simulation on the basis of Simulation I to minimize the influence on the 1 st aquifer Infiltration rate = some 6 Mm 3 /a Simulation V Recovery period and development of residual lake without any infiltration and production wells Determination of the influence on dewatering quantities Simulation VI when the 3 rd aquifer has a higher permeability than assumed Source: Sindh Engro Coal Mining Company (2010) Potential evaporation = 1700 mm (on the lake surface) 3 rd Aquifer Kf = 1.50 x 10-4 m/s (50% increase) 3-39

122 Data Collection Survey on Thar Coal Field 3.5 Development Information for Other Similar Coalfields Comparison with Other Coalfield in South Asia (1) Neyveli Coalfield Lignite mining all over the world is being carried out under complex hydrogeological environments causing a range of water problems affecting the production method and utilization of run-off mine coal. There are a lot of practical examples of large lignite deposit developments in the world. Neyveli lignite deposit in South India is among those with similar geological conditions. There are no technical difficulties in developing this lignite field and producing lignite from a deep place. The lignite seam in Neyveli lignite deposit was first exposed in August 1961, and regular mining of lignite commenced in May Neyveli Lignite Corporation Ltd. is producing approximately 24 million tons of lignite from four O/C pits, and feeds the lignite to mine-mouth power plants (Total capacity 2740 MW). Comparison of geological conditions between Thar coalfield and Neyveli coalfield is shown in Table Table Comparison of Geological Conditions between Thar Coalfield and Neyveli Coalfield Thar Lignite Coalfield Neyveli Lignite Deposit Geological age of coal- Bara formation (Pliocene) Miocene age bearing formation 0.2 m-22.8 m (cumulative thickness 0.2 m 36 m), Max Thickness of lignite 8 m 27 m 20 lignite seams Upper strata: dune sand m (ave. 50 m) sand silt Cuddalore sandstone 45 m to 103 m clay (lateric-clayey very hard sandstone ) Overburden condition Lower strata: Alluvial deposit m (ave.150 m) sandstone. siltstone Sand dune aquifer 0 m 5 m thick. The groundwater 49.5 m thick aquifer above lignite Cuddalore sandstone Unconfined aquifer table is in general about 50 m to 60 m below ground surface. Confined aquifers Coal Seam Roof Aquifer (Sub-recent Aquifer) 0 m to about 12 m thick Coal Seam Floor Aquifer (Footwall Aquifer): 30 m to 50 m (Block II) and about 60 m (Block II) and about 60m (block I) 2 aquifer zones under Lignite zone Upper : 27 m thick Lower : very thicker extending to the bottom of the basin, upward pressure of 6 kg/cm2 to 8 kg/cm2 Resources Billion Tons 2 Billion Tons of Lignite Reserves 5 million tons (Block I) Mine I 10.5 million tons, 6.5 million tons (Block II), Mine I - A 3.0 million tons, Annual production 2.4 million tons (Block VI), Mine II 15.0 million tons, Barsingsar 2.1 million tons Strip ratio 6.6 : 1 (m 3 : t) 7.0 : 1 (m 3 : t) Quality coal rank Lignite B to Sub-bituminous A Lignite (no coal rank data) Moisture (AR) 46.77% 53.00% Ash (AR) 6.24% 3.00% Volatile matter (AR) 23.42% 24.00% Fixed carbon (AR) 16.66% 20.00% Sulphur (AR) 1.16% 0.6% Heating value (Ar.) 5,774 Btu/lb (3,208 kcal/kg) 2,400 kcal/kg Source: Base data from TCEB (Thar) and Neyveli Lignite Corporation Limited Web Home page 3-40

123 Chapter 3 Thar Coalfield Development Base map: The Times Atlas of the World Figure Location Map of Thar and Neyveli Coalfields Source: PPIB Pakistan s Thar Coal Power Generation Potential 2008 Source: R.N.Singh, A.S.Atkins, A.G..Pathan

124 Data Collection Survey on Thar Coal Field Figure Cross-Section Showing Different Aquifers in Figure Neyveli Lignite Deposit Aquifers Block III, Thar Coalfield Neyveli development introduced the German excavation technology in open cut mining, using BWE, conveyors and spreaders, which is used in this mine for the first time in India. While overburden thickness varies from 50 m- 95 m, lignite thickness varies from 10 m- 23 m. The overburden to lignite ratio in this mine is 5.5 at the beginning. Recent figures on production and overburden are shown in Table Overburden removal amount has been increased recently. Mining system including BWE, conveyors and spreaders appears to be effective. Table Production and Strip Ratio in Neyveli Lignite Mine Target Actual Target Actual Target Actual Target Actual Target Actual Overburden (10 6 m 3 ) Lignite (10 6 t) Strip Ratio Source: Neyveli Lignite Corporation Limited Web Home page Neyveli Lignite Mine s production capacity is not huge compared with Thar lignite projects; however, the BWE mining system is effective because it has been adopted for a long time. Meanwhile, T&S method is effective for the first time in Pakistan. (2) Neyveli Power Stations Courtesy : Website of Neyveli Lignite Corporation Limited 3-42